The number of investment fraud cases reported to Action Fraud has surged exponentially since 2016.
Figures by the Office for National Statistics (ONS) show that there were 17,538 cases filed with the reporting centre in 2020, compared to 4,342 five years ago.
But fraud convictions have not followed a similar trend.
According to a freedom of information (FOI) request by wealth giant Quilter, convictions under the Fraud Act 2006 have been on a free fall in the last decade.
They peaked in 2011 with 9,095 custodial sentences, while there were only 3,453 in 2020, a level similar to when the Act was introduced (3,150 convictions in 2007).
Additionally, despite the 48% increase in investment fraud reports, just one-in-700 frauds resulted in a conviction.
Quilter also discovered that in 2020 the average custodial sentence under the Fraud Act 2006 was just under 20 months, despite fraud carrying a maximum of 10 years, and the average fine was of £463 ($632, €536).
Deterrent ‘practically non-existent’
Debbie Barton, financial crime prevention expert at Quilter, said: “Over the past few years, we’ve seen a worrying rise in the number of investment frauds reported to Action Fraud. From dubious cryptocurrency and forex trading schemes to non-existent investment bonds, fraud lurks everywhere, particularly online and on social media.
“Yet instead of seeing an uptick in the number of fraud convictions to match the rapid increase in reports to Action Fraud, we’ve seen the opposite. Fraud convictions have dropped off a cliff since 2011 to reach levels not seen since the Act was first introduced.
“Investigating fraud is extremely complex, costly and time consuming, hence why hard stretched police forces have had to make the difficult decision to prioritise other crimes. The result of which being that the legal deterrent for committing fraud is practically non-existent.
“The surging fraud numbers and falling convictions should send alarm bells ringing in the government. What we need is a holistic review of the UK’s fraud landscape to consider why so many fraudsters are slipping through the net, and to consider how authorities can send a strong message that they intend to get a grip on fraud once and for all.
“A good start to protect the public would be for the government to include further fraud typologies in the Online Safety Bill so that technology companies have a legal duty to tackle harm caused on their sites and have to take up the slack in monitoring the online world for scams.”
