Fraud authorities not visible enough to UK SMEs

Mon, January 29th, 2018

The results were obtained from the Close Brothers Business Barometer

Nearly 6 out of every 10 (58%) of the UK’s SMEs do not know who the relevant authorities are to help them deal with fraud, according to research from Close Brothers Asset Finance.

The results were obtained from the Close Brothers Business Barometer, a quarterly survey that questions over close to 1,000 UK and RoI SME owners and senior management across a range of sectors and regions.

“With the value of reported fraud committed in the UK last year topping £1bn last year it’s critical that business owners know who the relevant authorities are, even if they haven’t been directly targeted,” said Neil Davies, CEO, Close Brothers Asset Finance. “Much of this fraud was driven by an increase in cybercrime, highlighting the importance of having the correct online checks and balances in place.”

Firms with 10 or fewer employees were the least likely to know who to contact, while regionally, businesses in the East Midlands were the least knowledgeable about fraud authorities.

Q: Do you know who the relevant authorities are to help you deal with fraud even if your business hasn't been the victim? (business size)

                        UK avg.   Between 1 - 10    Between 10 - 60    Between 60 - 250    Over 250
Yes                   42%             34%                      45%                            52%                       45%
No                    58%             66%                      55%                             48%                      56%
Fraud victims
Of those surveyed, 13% of SMEs say they had been a victim of fraud; however, in London that figure more than doubles to 27% while for firms with a turnover of between £5m and 10£m it’s even higher at 30%. Sector-wise, Print at 29% were the most likely to have suffered from fraudulent activity.

“Around one in every eight firms in the UK have been a victim of fraud,” said Neil. “This can have a range of impacts, from loss of trust and reputational damage all the way through to receivership and jail terms for those involved. The figures confirm that no-one is immune and it happens in all walks of life, across all industries and in companies of every size.”

Legal advice
Over a tenth (11%) of respondents have had to seek legal advice because of fraud; London was again the highest among the regions with 24% answering ‘yes’ to the question ‘have you ever had to seek legal advice because of fraud?’.

                                                             Yes              No
UK combined                                     11%           89%
North East England                           15%           85%
North West England                           8%            92%
Yorkshire/Humberside                       7%            93%
East Midlands                                     6%            94%
West Midlands                                   12%           88%
East Anglia                                         4%             96%
Greater London                                 24%            76%
South East England                          11%            89%
South West England                          9%             91%
Scotland                                              8%             92%
Wales                                                 19%            81%
Northern Ireland                                 10%           90%

Insurance against fraud
Only 35% of businesses are certain they are covered in the event of fraud, with 37% answering ‘no’ to the question ‘is your business insured against fraud?’; the remaining 28% ‘don’t know’.

“For firms with a turnover of under £250k that figure halves to 18%,” said Neil. “If you don’t know, then it’s worth checking your insurance policies to see whether you are insured against fraud, theft or dishonesty.

“This could be via a stand-alone policy or as part of an insurance product like home contents, travel, or legal expenses.

“According to the Fraud Advisory Panel, it’s also possible to sometimes buy ‘after the event’ insurance after a fraud has taken place to help fund the costs of civil litigation, asset recovery and/or insolvency. These policies provide insurance against the cost of trying to recover those losses through legal proceedings.”

For more news from Close Brothers Asset Finance please click here.

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