Clare Taylor, partner in our Dispute Resolution & Litigation Group, summarises the key issues arising from this new legislation.

The face of fraud has changed considerably over recent years in the light of new technology. The Fraud Act, which came into force on 15 January 2007, is the latest attempt to tackle growing levels of financial crime. The Act is a complete overhaul of the criminal offences available for prosecuting fraudsters. It provides new avenues for combating fraud and aims to simplify the prosecution process.

For the first time in UK law, the Act creates a general offence of 'fraud', distinct from the previous offence of 'conspiracy to defraud'. The new offence is punishable by up to 10 years in prison and/or a fine. There are three ways of committing fraud under the Act:

  • False representation

  • Failing to disclose information, and

  • Abuse of position.

To be found guilty of fraud in any of the three ways, the behaviour in question must be dishonest and there must be an intention either to gain from the dishonest actions or to cause loss or a risk of loss to another. Unlike previous deception offences, there is no need to prove that actual loss or gain occurred, provided the requisite intention is there.

New offences

In addition to introducing the offence of fraud, the act also provides for two new offences designed to target technology fraud. Namely, obtaining services dishonestly and possessing articles for use in frauds. The former is likely to serve primarily as a tool for protecting against internet credit card fraud whilst the latter is aimed at criminal gangs committing fraud on a large scale. Finally, the Act creates a new offence of fraudulent trading applicable to non-corporate traders. This parallels the current corporate offence under the Companies Act 1985.

The Act introduces a number of welcome changes to the current legislation. It provides further tools for combating fraudulent crime, a greater deterrent through increased sentencing powers and should help to speed up the litigation process. One area it doesn't address however is the limited police resources for investigating potential fraud and for this reason its immediate effect may be limited.

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