West Midlands a ‘hot spot’ for employee fraud

Latest data has revealed a 65% increase in reported cases of fraud committed by workers against their employers in the West Midlands – putting the region second only to London as an employee fraud hot spot.

Businesses in the region are urged to act now to ensure they have robust anti-fraud measures in place, as the government publishes further details on the Economic Crime and Corporate Transparency Bill 2022.

Figures obtained by RSM UK under a freedom of information request shows there were 94 instances of corporate employee fraud reported to Action Fraud last year, up from 57 reported incidents in 2021. This equates to a loss of £7,775,088 in 2022, more than triple the £2,341,424 stolen through employee fraud in the region in 2021.

Across the UK, the number of employee fraud cases reported last year reached 885 and increased five-fold to £227,151,202 when compared to the year prior. The mean average loss is £256,668 per incident.

Common types of employee fraud investigated by RSM UK include staff diverting payments to their own accounts, procurement fraud and misappropriation of assets, bribery and corruption, and travel and subsistence fraud.

Erin Sims, associate director of fraud risk services in Birmingham at RSM UK, says: “In England, the West Midlands has experienced the most significant increase outside of London in both volume of reported incidents of employee fraud and amount of funds stolen. The West Midlands Police is the second largest police force in the country with fraud being the fifth most reported crime, however, the FTE serving in the Economic Crime Unit, created to investigate concerns, makes up only around 1%.

“With the limited likelihood of business victims receiving a positive response through the criminal justice process, it is key for co-ordinated efforts across the region to focus on decreasing the levels of fraud as well as for businesses to focus on prevention, detection and creating a culture that encourages staff to raise concerns. The bad actors who remain unchallenged will only go on to commit fraud again, creating more losses within our region.

“A recent report by the West Midlands Police** recommends using a public health approach to fraud which involves using prevention-based interventions. This focuses less on tackling offenders but more about promoting ‘fraud health’, by enhancing the wellbeing and financial security of the region. But with tough economic challenges for businesses, a cost-of-living crisis for individuals, geopolitical uncertainty and the rise in agile working all combining to create a perfect storm for increased risk of employee fraud, businesses need to be alert and prepared for the worst.”