After dominating fraud figures in recent years, BDO said the finance and insurance sector only accounted for 27% of all reported fraud in 2011, compared with 56% in 2010, representing its lowest percentage in the past five years.
Simon Bevan, head of fraud at BDO, said: “Financial services institutions have invested heavily in systems and technologies to prevent and track fraud, so the fact that reported fraud in this sector has decreased as a percentage of overall fraud suggests this approach is working. But there is still a long way to go.
“The most serious frauds, in terms of financial loss, in financial services are often committed by employees and management.
“Yet most of the in-house fraud teams within banks etc tend to be made up of ex-policemen. They are often too focused on external “criminals” dealing with credit card fraud, phishing etc, when the greatest risk is internal with banks’ employees committing commercial lending, mortgage or rogue trading fraud.
“It is this failure to take a holistic approach to tackling fraud that can lead to those high profile, costly incidents that we have seen in recent years.”
The value of reported fraud rocketed to more than £2bn in the UK last year according to BDO. This represents a 50% increase on 2010’s figure of £1.4bn.
The retail sector accounted for 12% of all fraud in 2011, compared with 2% in 2010, while the construction sector represented just 1% of all reported fraud, compared with 34% in 2010.
Bevan added: “The fact that reported fraud is up is worrying but not at all surprising. When the economic climate is difficult there is even more focus on the bottom line and driving out unnecessary costs, so fraud is more likely to be uncovered.
“But organisations need to be much more proactive when it comes to preventing fraud. Too often risk teams are either too externally focused or fail to look at fraud from a financial point of view.”
