Fraud and Regulatory Protection

Fraud is a major cross-sector issue, one that costs the economy billions each year. It is one of a number of harms for which regulation exists - and continues to evolve - to protect us as consumers and as society. These risks and regulatory obligations have a significant impact on businesses. We support our clients to stay abreast of these changes and operate compliant, efficient and effective business models.

For over 20 years, we have had a strong brand profile around regulatory protection and fraud risk management, developed through our extensive history supporting organisations respond to fraud risks and investigate incidents of fraud, reinforced by our related capabilities in Financial Crime.

69%

of reported incidents of fraud were committed by an external perpetrator

Source: PwC's GECS 2022
40%

of organisations experienced frauds committed on the platforms they use or operate

Source: PwC's GECS 2022
70%

of surveyed companies experienced new incidents of fraud as a result of disruption

Source: PwC's GECS 2022

Market context and drivers

Emerging legal and regulatory requirements

New legal and regulatory requirements are being introduced that will have wide-ranging impacts for UK business and which bring new organisations (in particular tech companies) into the regulated sphere. An increased focus on compliance is being driven by the Online Safety Act, corporate transparency obligations, new and emerging greenwashing regulations, and new fraud-related corporate governance standards.

These regulatory developments have emerged from the growing public perception that businesses should be responsible for protecting their customer, and wider society, from harms facilitated by their services. One such harm has been fraud, with headline fraud rates rising over the last decade. Fraud now accounts for more than 40% of reported crime in the UK, according to the Home Office 2023 Fraud Strategy.

The introduction of a corporate ‘failure to prevent’ fraud offence will drive increasing board-level scrutiny of fraud risk management, similar to that seen as a result of the introduction of the UK Bribery Act.

Environmental, Social and Governance

ESG is an increasing area of focus for governments, businesses, regulators and consumers. Climate change is an area of particular focus, but ESG covers a wide range of environmental, social and governance-related topics. Across government and the private sector, risks relating to ESG fraud (including greenwashing) within organisations and their supply chains are increasing, as are obligations on organisations to make accurate disclosures on ESG commitments.

Fraud

Rising fraud rates are driven by a cocktail of societal, economic and technological changes and challenges. Market distress and economic disruption are fuelling rising fraud and Organised Crime Groups (OCGs) are increasingly adopting fraud as a lucrative and low risk form of crime. Certain sectors are particularly vulnerable and have suffered a higher level of fraud losses, notably Financial Services, Government and Consumer Markets.

Online Safety

The Online Safety Act passed into law in October 2023, introducing a new regulatory framework for enhancing online safety, and aiming to offer greater protection for children in particular. Ofcom are currently developing guidance and codes of practice that will set out how online platforms can meet their duties under the Act. Our experience tells us there are a number of challenges and pitfalls companies face when working towards sustainable compliance for the new regulation. As duties associated with the Act come into force, companies will need to consider how to adapt their existing compliance programmes to ensure compliance.

Advisory

We support our clients to strengthen their fraud risk management arrangements, including support to strengthen:

governance
risk assessment
prevention
detection
response

We also support our clients to understand and respond to emerging laws and regulations including the Economic Crime and Corporate Transparency Act.

Technology

The constant evolution of the fraud landscape means that a static model for detecting and preventing fraud simply cannot keep pace. We have always championed the use of technology in the prevention and detection of fraud, but never has this been more important than today.

We continue to develop and leverage our own digital assets, such as Data Thread and Risk Detect. Our key offerings spread across eDiscovery, Fraud Technology & Investigative Analytics.

Managed Services

We provide Managed Services to deliver:

Detection Analytics as a Service
Fraud Operations
Case alert investigation

We provide continuous operations for our clients, giving access to multidisciplinary teams, including fraud SMEs, operations analysts, technologists, QCs, and programme managers.

Our Technology Alliances (Quantexa, FDS, Clearspeed)

Examples of how we have helped our clients

Evaluation of levels of fraud
Supported a bank to evaluate levels of fraud in the £70bn covid-19 lending schemes. A high-profile engagement as part of which we interacted with fraud stakeholders within our client and more than 120 financial services lenders.

Development of a new analytical capability
Working alongside the public sector to develop a new data and analytical capability within the National Fraud Intelligence Bureau.

Review of fraud risk management
Supporting a large, digital bank with a comprehensive review of their overall fraud risk management approach in preparation for a regulatory inspection.

UK Economic Crime Plan support
Being appointed as a Government office's lead advisor to support the implementation of the UK Economic Crime Plan through which we are working with private sector partners across all aspects of the fraud ecosystem.