Monday 24 May 2021 6:00 am

City police opened 50 per cent more Covid loan fraud probes in February

City of London police commenced 50 per cent more investigation into fraud connected to the government’s Bounce Back Loan scheme (BBLs) in February than the prior month.

Police opened 26 such probes in February, up from 17 in January, international law firm RPC said. It opened a further 28 in March.

Back in October the National Audit Office (NAO) estimated that the taxpayer could lose up to £26bn on the BBL scheme, which sees small businesses given up to £50,000 in loans.

More than 1.5m businesses took out a loan before the scheme closed on 31 March 2021. 

Due to increased risk of credit and fraud risk related tot the scheme, it has been estimated that between 35 and 60 per cent of lenders could default on the losses. 

Sam Tate, partner and head of white collar crime at RPC says: “The authorities will want to accelerate the pace of investigations. Otherwise there is a high risk these assets will leave the country.”

“BBLs have been particularly attractive to fraudsters. Despite lenders blocking tens of thousands of applications believed to be fraudulent, many will have slipped through holes in the net, with the cost to the taxpayer estimated to be in the billions of pounds.”

“Yet, trials even for serious BBL fraudsters caught today are unlikely to take place until 2023/2024, which is less of a deterrent for on-going fraud.”

City A.M. has contacted the City of London Police for comment. The British Business Bank, which administers the scheme, declined to comment.

In this year’s Budget, Rishi Sunak announced £100m in funding for a new agency to crack down on suspected Covid fraud.

The department, which is overseen by HMRC, has already opened about 10,000 inquiries into suspected fraudulent activity,  and has begun some criminal investigations.