Failure to Prevent Fraud comes into force

The new corporate offence of Failure to Prevent Fraud (FtPF) comes into force today (1 September 2025).

The FtPF offence extends corporate liability to the actions of employees, agents and other associated persons in circumstances where the criminality (in this case – fraud) is intended to benefit the organisation or its clients.

In a joint statement^[1] issued by the Fraud Minister, the Solicitor General, the SFO and the CPS, the British authorities have made it clear that they are keen to pursue offenders.

The Solicitor General, Lucy Rigby KC MP, said:

Fraud undermines our British values of fairness and playing by the rules.  It hurts individuals and businesses, and harms business confidence.

This new legislation sends a clear message that large organisations must take responsibility for preventing fraud, and those that fail to do so will be prosecuted with the full force of the law.

This government is committed to protecting our economy and we’re determined that those who don’t play by the rules will be brought to book.

The UK courts will have jurisdiction for the offence, provided that the fraud has a UK nexus, meaning the fraudulent act (i) must include an act that occurs in the UK; or (ii) results in a gain or loss in the UK. The only defence available is for the corporate to prove that it had reasonable fraud prevention procedures in place at the time of the offence.

The offence applies to large organisations^[2] defined as meeting at least two of the following criteria:

• more than 250 employees
• more than £36 million in turnover^[3]
• more than £18 million in total assets

The FtPF offences apply to fraudulent conduct by individuals or entities, including dishonest sales practices, hiding information from customers or investors and dishonest practices in financial markets.  Importantly, there is no requirement for a conviction for the underlying offence, or indeed for a prosecution of the relevant conduct.

Reasonable procedures

As set out above, there is a defence for large organisations of having “reasonable procedures” in place to prevent fraud.  This is not a “one-size-fits- all” toolkit, but must be a well thought-through, risk-responsive, living and breathing compliance system.  Organisations which have not already adapted their compliance policies and processes to cover fraudulent conduct should be looking at this as a matter of priority.

How can Gherson help?

At Gherson Solicitors LLP we regularly advise organisations on designing and implementing effective financial crime prevention policies, procedures and controls.

If you need further advice on what the new offence of failure to prevent fraud means for your organisation, please do not hesitate to contact Caroline Black or Thomas Cattee at Gherson Solicitors LLP.

If you have any questions arising from this blog, please do not hesitate to contact us for advice, send us an e-mail, or, alternatively, follow us on X, Facebook, Instagram, or LinkedIn to stay-up-to-date.

The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please do not hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.

©Gherson 2025

[1] https://www.gov.uk/government/news/new-measures-to-tackle-fraud-come-into-effect?utm_medium=email&utm_campaign=govuk-notifications-topic&utm_source=eb025273-a782-4208-8cea-df9f7fc78b39&utm_content=daily

[2] Section 201 of ECCTA.  Applies to the financial year prior to the year of the base offence,

[3] “Turnover” means the amount derived from the provision of goods and services falling within the ordinary activities of the commercial organisation or subsidiary undertaking, after deduction of

(a) trade discounts;

(b) value added tax; and

(c) any other taxes based on the amounts so derived.