Fraud squad to tackle bounce back loan fraud

The Public Sector Fraud Authority (PSFA) has been launched to tackle high levels of bounce back loan fraud with a ￡180m target set for the first 12 months

The PSFA will work with government departments and public bodies to crack down on fraud. Backed by ￡25m of new funding, the organisation will modernise the government’s counter fraud response, better protecting taxpayers’ money.

This will be delivered in part by supporting the Department for Business (BEIS) and bank lenders with tools to identify fraud and recover money linked to the abuse of bounce back loans.

Chief secretary to the Treasury, Simon Clarke, said: ‘It will reinforce wider investment in government to crack down on fraud and mis-claiming, including ￡210m for HMRC to further tackle fraud, and ￡510m for DWP to target welfare fraud in 2021.’

Counter fraud activity for the bounce back loan scheme was implemented too slowly to be effective, according to a report from the National Audit Office (NAO).

In March 2021, 11% of bounce back loans granted were fraudulent - this equated to an estimated ￡4.9bn in lost taxpayer funds.

The bounce back scheme offered loans of up to ￡50,000 to support businesses during the Covid-19 pandemic. However, there was limited verification, and no credit checks on borrowers, which made it vulnerable to fraud and losses.

The organisation will be led by Mark Cheeseman OBE, an expert in public sector fraud, who previously led the government’s Counter Fraud Profession and established the International Public Sector Fraud forum.

Interim Public Sector Fraud Authority CEO, Mark Cheeseman OBE, said: ‘The creation of the Public Sector Fraud Authority represents a landmark in our fight against public sector fraud. We know that fraudsters are a committed, capable and evolving adversary.

‘To respond to this we must raise our ambition and challenge ourselves to increase our impact on this often unseen and underestimated crime. The PFSA will support public servants across government and public bodies to take that step – to innovate and to modernise our approach to fraud.’

The launch will support the National Fraud Initiative (NFI), a service that uses technology and data matching to locate and prevent fraud. Between 2020 and 2022, the initiative prevented more than ￡200m of public sector pension fraud.?