Member Article

Fraud ? the new regime

With Watson Burton LLP Law Firm

The Fraud Act 2006 (“the Act”) is now in force and has overhauled and widened the array of criminal offences available in respect of fraudulent behaviour.

The Act seeks to simplify the law by repealing the myriad of pre-existing offences which require proof of deception and replacing them with a general offence of fraud that can be committed in three ways, namely:

• fraud by false representation
• fraud by failing to disclose information where there is a legal duty to do so
• fraud by abuse of position

Dishonesty is a required element of each type of fraud. Each offence is punishable with a maximum of 10 year prison sentence and an unlimited fine for an individual or a company.

The Act explicitly recognises that a corporate body may commit the offences and also provides that any director, manager, secretary or other similar officer of the company (or any person purporting to act in such a capacity) will also commit the relevant offence if the company’s offence is proved to have been committed with the consent or connivance of that individual. This is of importance for directors as it would lead to the risk of prosecution for those who merely acquiesce in, as opposed to positively promote, dishonest conduct by their company.

There is good news for companies seeking to pursue fraudsters in the civil courts as the Act strikes a major blow to the prospects of defendants seeking to avoid disclosure of documents and information which may be crucial to a claim on the grounds that to do so might incriminate themselves.

The Act is a major step forward in combating fraud and should provide much needed protection to companies and individuals alike.

If you have any queries relating to this article please contact Nicholas Gemmell at Watson Burton LLP (nicholas.gemmell@watsonburton.com).

This was posted in Bdaily's Members' News section by Ruth Mitchell .