More than two-thirds of all UK fraud cases occur within the financial services, with the most common sectors for financial fraud being mortgages and specialised finance, according to research published by accountancy giant Ernst and Young.
Total fines issues to UK firms and executives for fraudulent activity has exceeded £1bn in the past five years, with 68 per cent of the fines being applied to the financial services industry, according to the study.
Since 2007, UK companies have been fined a total of £976.1m whilst individuals have been fined a total of £46m, equating to an overall total penalty for fraudulent activities of £1,022m. Close to half of all fines (45 per cent) in the past five years were between £10,000 and £100,000.
Individual prison sentences across all regulatory prosecutions ranged from eight months to ten years, with partners and directors receiving the heaviest punishments. The average prison sentence for the director of a company that has committed fraud is three years and three months.
The research reveals that since 1997, the average prison stay of a convicted fraudster – either acting individually or on behalf of a company - is 2,000 days.
The study collected data from over 700 cases of fraud reported since 2007 using information provided by three major UK governing bodies, including the now defunct Financial Services Authority, the Serious Fraud Office and the Office of Fair Trading.
John Smart, partner at Ernst & Young, said: “It is worrying to see that the regulators have needed to step in so frequently and issue punishments of this severity to businesses and executives.
“Just under half of the penalties handed out in the past five years have been monetary fines and the market, for the most part, is not in a condition for businesses to be losing money due to negligence.
“These results should serve as a stark warning to all businesses in the UK to get their houses in order.”
