Failure to Prevent Fraud

ECCTA introduces the latest “failure to prevent” offence for companies and partnerships, following those relating to bribery and facilitating tax evasion. The new offence makes organisations criminally liable if an associate (including an employee, agent or subsidiary) commits any fraud offence in order to benefit the organisation, its customers or clients. It came into force on 01 September 2025.

The aim of this legislation is to raise compliance standards for organisations to ensure they are not benefitting from fraud, such as the mis-selling of products or the making of false statements. A statutory defence is provided if the organisation had in place “reasonable procedures” to prevent fraud and the government has published guidance on the new offence and what will constitute “reasonable procedures”. For more on the guidance, please see our summary here or watch our on demand webinar.

Additional guidance for the financial services sector has been published by UK Finance. This is not endorsed by the UK Government and is therefore advisory only. It can be found here.

Companies and partnerships will need to review their existing policies and procedures to identify gaps and to design improvements. Many current anti-fraud policies will focus only upon fraud against the organisation or its customers, rather than for their benefit. For more on this, see our podcast series and our ECCTA Fraud Prevention Toolkit.