Only 15% of BBLS fraud has been investigated in the last two years

The Bounce Bank Loan Scheme, common to other COVID related support schemes, was heavily targeted by fraudsters. It was argued by the previous Government that it was better to issue funds to businesses through the BBLS than to subject applicants to more stringent fraud checks.

Data released by the Department of Business, Energy & Industrial Strategy has confirmed that the National Investigation Service has, in the two years since September 2020, only opened investigations into £160m in BBLS fraud, whilst £1.1billion in BBLS is suspected to be fraudulent.

Tate says that he expects this figure of £1.1billion in reported BBLS fraud to increase over time. Under BBLS £46.6 billion was distributed to 1.6 million recipients.

There is some variation across financial institutions as to the proportion of defaulted loans comprising suspected fraud but again, these figures are expected to rise as internal investigations continue. 

While lenders have reported preventing over £2.2 billion of fraudulent applications, it remains unclear as to the total amount of fraudulent funds being successfully recovered.

Tate has this to say: “What this shows is not only the huge amount of fraud perpetrated during lockdown but also real inadequacies in systems and controls at many banks, as previously identified in FCA enforcement activity.”

Tate continued: “Where the banks seem to have fallen down is in not adapting and implementing anti-money laundering and fraud checks quickly enough. Now we are left with a mess and there is little chance of recovering lost money.”

Tate added: “Next time the Government needs to be quicker to use all of the resources, including those of the private sector to stop and pursue this fraud at the earliest point.”

Tate concluded: “It is also of deep concern that the replacement to Action Fraud, which the Government has deemed is not fit for purpose, is not being put in place until some point during 2024. As Rob Jones, the director of the NECC said on Monday in relation to fraud, the current response is "just not good enough."