The full scope of the new legislation, which received royal assent last October, is expected to come into effect either later on this year or throughout early 2025, following a preparatory period which is predicted according to the UKH website, once ‘reasonable procedures of compliance’ have been carried out.
According to the Government website, organisations that will be in scope under the legislation will include public bodies, corporate subsidiaries and partnerships. The site also explains, that in order to ensure burdens on specific businesses are proportionate, larger organisations will be subject to specific and appropriate requirements and should meet two out of three of the following criteria:
Organisations with more than 250 employees, generating more than £36m turnover with more than £18m in total assets. Charity organisations will also fall under these requirements, alongside ‘incorporated public bodies’
The UKH website also encourages businesses to screen employees, encouraging stringent screening procedures for new hires and additional ongoing reviews of current staff. Period audits of employee access to sensitive information is also encouraged, alongside financial controls in order to prevent misappropriation of funds, and added enforced conflict of interest policies with the intention of alleviating the internal dangers of fraud.
Particularly vigilant
The UK Government website states, that fraud is the most common offence in the UK, totalling 41% of all crime in the year ending in September 2022. UK Hospitality has urged that the legal measure encapsulates all levels of staff, ranging from floor staff to senior management. The website states, the hospitality sector, where transactions often occur rapidly, and in high volumes must be particularly vigilant.
The website outlines key implications for all businesses as well as the direct consequences of defying the new legislation. Emphasising the importance of legal compliance, key site points include, financial penalties as well as criminal liability for senior management along with legal proceedings, in which businesses could face direct legal action and loss of contracts or business opportunities, as well as increased regulatory scrutiny.
Marcus Jones, managing director at Capcon, a business services company providing specialist anti fraud services stated: "With the introduction of the 'Failure to Prevent Fraud' offence, hospitality businesses must be proactive in their fraud prevention and risk management strategies. At Capcon, we advise operators to establish robust internal controls and staff training programmes tailored to identify and mitigate fraud risks effectively.” Touching on the importance of safeguarding, he continued: “It's crucial for businesses to foster a culture of transparency and accountability to safeguard their operations.” Jones described the importance of “Implementing comprehensive audit systems” as well as and “regular reviews” which can in turn, “significantly reduce the potential for fraud, ensure compliance with new regulations, and avoid potentially substantial fines."
The Gov.uk website reads, that the government is legally required to publish guidance on reasonable fraud prevention procedures. In a guide, taken from the Government website for operators and business owners to refer back to, UK Hospitality details up to eight steps for businesses to meet, in order to meet anti fraud compliance.
Tips shared include conducting a comprehensive risk assessment, cultivating an anti-fraud culture through comprehensive training, and implementing robust procedures, and where appropriate, utilising technology. Other key points include undertaking compliance audits, partnered with collaborating and sharing information and enacting through due diligence.
Evolving responsibility
George Greenaway, owner and brewer at the Tamworth Tap in Staffordshire shared his thoughts on the new legislation he stated: “We have recently conducted a risk assessment and have incorporated the awareness of the anti fraud legislation into our induction programmes and employment contracts. As a result of the risk assessment we will be constantly and visibly monitor transactional data for anomalies.”
He described the downsides of the new legislation as another cost and resource burden on the sector, explaining that despite this as more complex frauds appear to dominate the twenty-first century, remaining vigilant on the topic is “an evolving responsibility” to customers.
Brendan Padfield owner of the Unruly Pig in Bromeswell, Suffolk, also shared his opinions around the importance of anti fraud measures. He said: “This legislation would seem to codify the obvious as it has always been important to maintain anti fraud measures in terms of avoiding income loss, customer distress and anguish as well as reputation damage”
Padfield continued: "It will help focus minds. Fraud is an ever growing and burgeoning problem for everyone. The devil will be in the detail of the guidance that will follow from the government on what constitutes best practice here.” Padfield shared hopes for the guidance to be practical, straightforward and easy to grasp, emphasising the need for “non bureaucratic” guidance, stressing that smaller businesses have “more than enough on their plates” in the current climate.
The Government website details the following offences most likely to be relevant to corporations:
- fraud by false representation (section 2 Fraud Act 2006)
- fraud by failing to disclose information (section 3 Fraud Act 2006)
- fraud by abuse of position (section 4 Fraud Act 2006)
- obtaining services dishonestly (section 11 Fraud Act 2006)
- participation in a fraudulent business (section 9, Fraud Act 2006)
- false statements by company directors (Section 19, Theft Act 1968)
- false accounting (section 17 Theft Act 1968)
- fraudulent trading (section 993 Companies Act 2006)
- cheating the public revenue (common law)
