The corporate criminal offence of ‘Failure to prevent fraud’ came into force on 09/01/2025 under the Economic Crime and Corporate Transparency (ECCT) Act of 2023. This offence made organisations accountable for fraud which was committed by ‘a person associated with the body’, for example an NHS employee, to benefit the organisation either directly or indirectly. However, if the organisation was the intended victim of the fraud, then it will not be held liable.
If large organisations, including some NHS organisations, profit from fraud, they can now be held to account through prosecution and if convicted receive a fine. An organisation is deemed to be large if at least two of the below conditions were met within the financial year prior to the year the fraud took place:
The intention was for organisations to become more robust in anti-fraud measures, as if an organisation is prosecuted, it would be required to demonstrate reasonable fraud prevention measures were in place at the time the offence took place. Robust measures include a risk assessment and communication including training.
The Home Office advises NHS organisations to follow advice from the NHSCFA, and advisory guidance is available online at Failure to prevent fraud offence | NHS Counter Fraud Authority. These webpages include information on reasonable fraud prevention procedures and the impact on NHS bodies. Additionally, the NHSCFA will be responsible for investigating allegations of failure to prevent fraud and Local Counter Fraud Specialists (LCFSs) should refer any allegations by completing a CFS13c formh .
There is the potential that the failure to prevent fraud offence could apply to the thematic areas. For example, the area of data manipulation where fraud occurs through falsifying data to meet targets, increase revenue or hiding undesirable outcomes. As the NHS body and not the individual will usually benefit from the manipulation of data via an increase in revenue or averting fines, it is possible the offence could apply.
Ultimately, this corporate criminal offence should help to protect the NHS with improved anti-fraud measures. However, non-compliance could lead to reputational damage and undermine public and staff confidence. Regarding fines, the court must consider the impact on the performance of a public or charitable organisation.