Partner Richard Cannon explores the launch of the Home Office’s independent review into fraud offences and the disclosure regime, and discusses how this will impact future prosecutions.

Richard’s article was published in FTAdviser, 4 December 2023, and can be found here.

In response to concerns about effective prosecution of the current epidemic of financial crime, the Home Office has announced the launch of an independent review into the disclosure regime and fraud offences more widely. This two-limbed approach follows a recent government strategy paper, Fraud Strategy: Stopping Scams and Protecting the Public, which was published in June. Jonathan Fisher KC, a leading barrister with extensive experience in criminal cases, will chair the review.

According to the Home Office, the review has been established to consider the challenges of investigating and prosecuting fraud cases and the operation of the disclosure regime in a digital age. There has not been an independent review of fraud since 1986.

Criminal investigations relating to fraud frequently involve large volumes of digital material which can present a major challenge for prosecutors. In a criminal investigation, it is their duty to collate and review all material in their possession. Where not relied upon as evidence, it will become “unused material” and subject to the disclosure regime. Prosecutors have a further duty to disclose material to the defence which is either capable of undermining the case for the prosecution, or assisting the case for the defendant(s).

The law in relation to disclosure developed in an era when digital material was limited. The volume of such material seized has since grown exponentially. Although the Courts have issued guidelines relating to the handling and disclosure of substantial amounts of digital material, there is widespread recognition that the issue should be examined afresh. This comes in the wake of significant disclosure failures by the Serious Fraud Office (SFO) in several prominent cases.

Whatever the legal problem may be, technology is increasingly at the heart of the solution. Not only does legal technology streamline workflows and automate repetitive tasks, it is also used by judges and lawyers alike to access legal resources and make informed decisions. Efficiencies achieved through the use of AI software are already commonplace, transforming the accuracy and speed of legal tasks.

But resource is invariably an issue. The challenge is to develop processes which do not overburden prosecutors unreasonably and protect the duty on them to locate and serve material in their possession which is helpful to the defendant(s). Anything less than would be contrary to the right to a fair trial.

The review further aims to explore the “barriers to the investigation, pursuit, and prosecution of fraud offences.”

Home Office figures reveal that victims of fraud in the UK reported losing £2.3bn in 2021 while fraud now constitutes more than 40% of all crime in England and Wales.

Significant legislation has been passed to combat fraud: the Economic Crime (Transparency and Enforcement) 2022 Act and the Economic Crime and Corporate Transparency Act 2023. Both Acts are designed to frustrate fraudsters and to make fraud easier to investigate and prosecute. The government has also been active in the crypto space: the FCA has introduced regulations for international entities wanting to deal in crypto in the UK.

New laws may make it easier for intelligence sharing and for the SFO and the National Crime Agency (NCA) to obtain information from companies and individuals under compulsion. But prosecuting fraud is time consuming. Meanwhile, the outstanding caseload in the Crown Court means that defendants who plead not guilty are having to wait up to 18 months for their trials to take place.

The review’s terms of reference include a review of penalties for fraud: does the punishment fit the crime? The clear inference is that the current sentences do not provide a sufficient deterrent – but such deterrence is arguably impotent when fraud detection and conviction rates are so low.

Where does this leave fraud victims? They often face the loss of hard-earned life savings, and dismal recovery rates should certainly be considered by the review.

Its disclosure recommendations are due in summer 2024, followed by the fraud offences recommendations in spring 2025. These could well end up on the desk of a Home Secretary from a new government headed by a former Director of Public Prosecutions (DPP). Many lawyers hopefully anticipate that a change of government will produce an uptick in enforcement action.

Whichever colour that government may be, this review will hopefully deliver a clear vision for reform of the UK’s disclosure regime and the structure of fraud offences.

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