Can Fraud Be Reduced By Regulatory Control Alone?

Fraud is a massive problem, not only in the UK and USA but in most of the leading countries also. The fight against fraud needs to be stepped up, but the trend is to reduce public expenditure these days. This not only impacts agencies such as the police but also the fraudsters themselves will be feeling the pinch!

The question is - will this mean an even bigger rise in the level of fraud is coming? If there are less police officers in the regional fraud squads and the Serious and Organised Crime Agency is being disbanded, does this not mean that the fraudster will have less to fear when committing his or her crime. Even the Department for Business Innovation and Skills is significantly reducing the amount spent policing limited companies - meaning that any company set up with the intention of defrauding its customers will be more likely to prosper.

The trouble is that when frauds come to trial they run up huge Legal Aid costs for the fraudster. All their legal costs, which in a complex fraud can amount to £hundreds of thousands, even £millions, when all the costs of the legal team are considered. It seems that along with the funding for the regulators, Legal aid is set to be significantly cut also.

On a first look this might appear to be balanced. The fraud regulators are unable to deal with as many cases of fraud - but should you get caught you may not be granted the funding needed for an adequate legal defence. Quid pro quo? A better opportunity but with a bigger risk.

The differing ways in which the funds might be allocated is likely to be where the problem lies. Whereas it will be hard for any fraudster to obtain quality representation owing to the costs involved, the authorities on the other hand will be spending their scarce resources in a way that will produce the most return. This has always been their way, where previously criticisms have been that resources are always spent on serious crime such as murder, rape and dealing drugs. Frauds were often considered too much work for only a single conviction - one police officer could typically spend a year or more investigating a relatively minor fraud, whereas the same resource could result in successful prosecutions for 100s of burglaries or one or more "serious" crimes.

The danger is that the police will investigate the easier frauds, where quick results are possible, leaving the complex frauds alone. This means that businessmen practicing only sharp practice might be targeted - or unfortunate businesses that have failed but are accused of wrongful trading. With little chance of a high quality defence it is possible that these will become victims of the cut backs and that the clever fraudsters will escape sanction.