Letter: Covid loan fraud has lessons for future stimulus initiatives | #phishing | #scams

While I applaud chancellor Rishi Sunak’s instinct to get tough on Covid fraudsters (“Fraud unit to chase £5bn stolen from virus aid scheme”, Report, April 28), the £25mn he plans to spend will be throwing away good money after bad.

As a senior fraud investigator who has focused on the recovery of stolen funds for 30 years, I know that the costs involved will far exceed the £50,000 value of the loans that the new unit is planning to focus on.

The government should instead concentrate on loans of over £500,000 and preferably higher, where the cost of investigation and recovery will be proportionate to the amounts recovered. In the first instance the loans should be “triaged” to identify those with the highest chance of recovery. Once successful, the funds received could then support the next tranche of loan recoveries.

Even with this focus, I estimate that only 10-20 per cent of losses are likely to be recovered, equating to between £400mn and £800mn of the estimated £5bn that has been lost to fraud through the Covid loan scheme. Although this is a small fraction of the amount stolen, it is still a considerable sum which could be reinvested in training, new technology and people, which in turn could prevent the incidence of further fraud.

The government needs to learn lessons from the Covid loans debacle as it approaches future stimulus initiatives, such as those to meet its net-zero targets. It is significantly easier to reduce fraud losses through preventive controls than trying to recover losses once they have occurred.

Andrew Durant
Senior Managing Director
Forensic and Litigation Consulting
FTI Consulting, London EC1, UK

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