£1.1bn worth of BBLS loans suspected as fraudulent

Lenders did, however, report they had prevented more than £2.2bn worth of fraudulent application as a result of required “know-your-customer” and anti-money laundering checks. 

In order to recoup some of the money lost, the government has said it “remains focused” on working with the British Business Bank, lenders and law enforcement to tackle the scheme. The Public Sector Fraud Authority is supporting them in this, and has developed an analytics programme to understand the level and types of fraud committed. 

It’s also working with the National Investigation Service and Insolvency Service to investigate instances of fraud, recover fraudulent loans and penalise fraudsters. Since September 2020, it has opened 273 investigations into BBLS fraud with a total value of £160m. 

Of this, 78 suspects have been dealt with to date with 49 arrests being made. The Insolvency Service’s activity on BBLS fraud, meanwhile, has so far resulted in 242 director disqualifications, 101 bankruptcy restrictions and one criminal prosecution. 

For those who have taken out BBLS loans, £28.3bn worth of repayments are on schedule while £4.7bn have been fully repaid by borrowers. 

Additionally, £3.2bn worth of the loans are in arrears but haven’t yet defaulted, £1.4bn have defaulted but haven’t yet been claimed, and £2.6bn have been claimed but haven’t been settled. The total settled amount, meanwhile, cost £1.2bn. 

Overall, lenders flagged £1.1bn of the total value of £46.6bn of BBLS loans as suspected fraud. This figure is however subject to change as lenders review cases as a suspected fraud flag can be added or removed by lenders at any point based on their continued analysis of their loan portfolios. 

The data also shows that, of the £1.2bn total settled amount, £263m has been paid out to lenders against loans with a suspected fraud flag. Since fraudulent loans are likely to be among the first to default, it’s expected that the proportion of guarantee loans should decline as the scheme matures. 

Meanwhile, the British Business Bank estimates the total amount of BBLS fraud stands at 7.5% - however this is due to be updated in the business department’s 2021 to 2022 annual report and accounts.