The Law

The Fraud Act 2006 - An Overview

The Fraud Act 2006 came into force 15th January 2007 and abolished all deception offences of the Theft Act 1968 and 1978, Creating new offences of Fraud committed;

By false representation (s.2)
By abuse of position (s.3)
By failure to disclose (s.4)

It also covers,

Possessing, making or supplying article for use in Fraud
Fraudulent trading (by individual or sole trader)
Dishonestly obtaining services (from Theft Act)
Conspiracy to defraud

Mens rea - ‘intention to make gain for one self or another, or to cause loss to another, or to expose another the risk of loss’

Fraud by False Representation (S.2)

This section refers to dishonestly making a false representation AND intends by making the representation to make gain for one self or another, or to cause loss to another or to expose another the risk of loss. The rrepresentation is false if it is untrue or misleading AND the person making it knows it to be so. It includes representation as to fact or law and it can be expressed OR implied and submitted in any form to any system or device designed to receive convey or respond to communications. It covers obtaining, attempting to obtain property (or other pecuniary advantage) by deceit.

Fraud by Failing to Disclose (S.3)

This section refers to a failure to disclose information to another which is required by legal duty, AND where there is an intention to make gain for one self or another or to cause loss to another, or to expose another the risk of loss. It could be used in conflicts of interest in certain types of contracts. It doesn’t apply to Moral Duty to Disclose and recognizes the principle ofcaveat emptor

Fraud by Abuse of Position (S.4)

This refers to a person occupying a position where he is expected to safeguard, or not to act against the financial interests of another and where they dishonestly abuse that position AND intend to make gain for themselves or another or to cause loss to another or to expose another the risk of loss. May consist of an omission rather than an act e.g. an employee is given access to his employers premises, equipment and customers and is expected to use them for his employer’s benefit NOT his own. Other Examples;

A public house manager selling privately bought beer through the premises that he is trusted to manage on behalf of his employers.
A bank compliance officer failing monitor risk (by being engaged in other activities such as playing solitaire on his computer) exposing organisation to financial loss

Other Fraud Legislation

The following ACts still apply in the following circumstances;

Theft Acts 1968 and 1978

Misappropriation of assets
False accounting
Financial statements

Forgery and Counterfeiting Act 1981

False instruments – cheques, share certificates, bankers drafts, etc

Intellectual Property

Computer Misuse Act 1990

Unauthorised access or modification

Criminal Justice Act 1993

Insider dealing (S 52)

Trademarks Act 1994

–Intellectual Property

Financial Services and Markets Act 2000

False Financial Statements

Proceeds of Crime Act 2002

Acquisition, use, possession of criminal property (subject to disclosure)

Value Added Tax Act 1994

False accounting

DISCLAIMER - the above does not constitute legal advice. Always seek professional legal advice from a solicitor.

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FRAUD REPORTING HOTLINE

To report fraud or corruption in your organisation, actual or suspected go to:

www.fraudlineUK.org.uk

The Law

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FRAUD REPORTING HOTLINE

0800 144 4944