With the government looking to streamline the process of fraud detection, the regulators that are currently involved in the processes have drawn the battle lines in a bid to become the primary body to deal with fraudulent activity in the UK. The main bodies involved are the Serious Fraud Office and the Financial Services Authority, both of which consider that they are in an ideal position for dealing with the detection of fraudulent activity and the investigation of fraud.

Proposals for Central Agency

By recognising the importance of having a super body that is able to deal with all types of fraudulent activity, in an efficient yet strict manner, the government has said that it intends to create a central agency that will cover all types of serious crimes, thus allowing the government to be more efficient in the way that it deals with these crimes.

This central agency will encompass the Serious Fraud Office, the Financial Services Authority, the Office of Fair Trading, Revenue and Customs and the Crown Prosecution Services under one umbrella, so that they can work in combination to prevent doubling up on tasks and also to save costs, where appropriate.

George Osborne stated: “We are very, very bad at prosecuting white-collar crime. We have six different governmental departments, eight different agencies — a complete alphabet soup — and the result is that these crimes go unpunished. There is £30 billion worth of fraud taking place in the British economy each year”.

Devil is in the Detail

The plan is in essence well received, but the golden question remains as to who will ultimately run the agency. It has been stated that the two obvious choices are the FSA and the SFO; however, the struggle between the two is far from over to take on the overall control of the organisation.

The FSA is putting forward the high number of arrests that it has recently achieved, whereas the SFO is stating that it has achieved great success and is making public declarations “in advance of its annual report which will be published in the summer”. It is also noted that the conviction rate has gone up from 78% to over 90%, in recent years.

Although these figures look impressive, it would appear that the SFO figures only give the percentage of convictions, based on those who were tried, and it makes no reference to the costs incurred in achieving these convictions. Some high profile cases such as those involved in Operation Holbein were thought to have cost in excess of £40 million; the latter case was ultimately thrown out by the judge, before it had the opportunity to reach trial.

It is clear that there needs to be greater clarity regarding who runs the operation; the SFO itself is thought to be unwieldy and complicated, with the review stating: “Staff are confused by layers of decision-making created by the three senior teams in an organisation of 300 people. It is not clear to many staff who is implementing the strategy and who runs day-to-day operational management”. The SFO’s strategic management board, its most senior board, “needs urgently to reconsider the SFO’s governance structures”.

Further reports are expected, in the near future, as the government looks to reduce costs and improve efficiencies, when it comes to the detection and prevention of fraud.