Last week signalled the introduction of the new Failure to Prevent Fraud (FTPF) offence across the UK, a development that could have serious consequences for Scottish businesses that are not prepared.
The legislation makes large organisations criminally liable if an employee, or anyone acting on their behalf, commits fraud to benefit the business and the company cannot show it had reasonable prevention procedures in place.
Put simply, it removes the defence of ignorance. If fraud occurs, the onus will be on the business to prove it had safeguards, policies and training in place.
The new legislation is a significant shift. It closes the loophole that allowed organisations to claim they did not know what employees or agents were doing. From now on, lack of awareness will not be an excuse.
Unfortunately, this is the kind of compliance work that often slides down the priority list. For many Scottish firms, fraud prevention may feel like a box-ticking exercise for a risk they assume won’t apply. But ignoring it could now leave many dangerously exposed.
A survey by law firm Dentons earlier this year found that 30 per cent of Scottish companies had not appointed anyone to oversee FTPF compliance. Even among those that had, 78 per cent admitted they had not completed a fraud risk assessment, despite it being central to Government guidance. This certainly suggests to me a worrying lack of readiness across the board.
The guidance calls for thorough risk assessments, proportionate controls and due diligence, clear and ongoing training, plus monitoring and review processes. These are not once-and-done actions for businesses, but ongoing responsibilities.
The good news is the legislation does not apply to every company. To qualify as a “large organisation” you must meet at least two of the following criteria – more than 250 employees, turnover above £36 million, or assets over £18 million.
For smaller firms the pressure is much less, though many will still want to adopt elements of best practice voluntarily, as it will certainly help in the long term.
For those in scope, however, failing to act is not an option. Prevention procedures may not eliminate fraud, but they demonstrate reasonable steps were taken, which could make all the difference if any wrongdoing comes to light.
Unfortunately, Scottish examples are not hard to find. Just this June, Thomas Robinson was jailed for selling Italian tea as Scottish between 2014 and 2019, deceiving luxury hotels, retailers and genuine growers, earning him the unfortunate moniker of Tetley Tam within the media.
Further back came the “black fish” scandal, where Shetland skippers and a processing company tampered with weighing equipment so catches of mackerel and herring appeared smaller than they were, allowing them to breach EU quotas and sell the excess illegally. The fraud led to heavy fines and was condemned by the courts as a “shameful episode” for the fishing industry.
At a UK-wide level, Patisserie Valerie remains the starkest example. Four former finance team members face trial in 2026 accused of inflating cash reserves by £94 million between 2015 and 2018. The fraud created a massive accounting black hole and pushed the company into administration. Before the collapse, the business appeared to be thriving, shares were strong, and executives sold £13 million worth of stock. Neither the directors nor auditors spotted what was happening.
High-profile cases like these explain why the UK Government has acted. The FTPF offence is designed to ensure larger businesses have the right checks and training in place – and to hold them accountable if they don’t.
Ultimately though, no business can control every action of its employees, contractors or partners. But they can put robust measures in place to reduce the risk. The new offence is a clear signal that the Government expects them to do exactly that.
Fraud prevention may not feel urgent, until the moment it is. And by then, it’s too late. So it will be interesting to see how this new legislation will impact businesses moving forward.
Laugh (129 words)
Sweet tooths rejoice – Haribo is opening a dedicated flagship store right here in Scotland.
Next week will see the German confectionary company open its first Scottish outlet at Glasgow’s Silverburn Shopping Centre.
I must admit I do find it remarkable that there’s this much hype over gummy snacks, but I suppose we should never underestimate peoples’ appetite for sugary snacks.
With more than 40 varieties of Haribo and Maoam products on sale, the days of the much-anticipated childhood trip the sweetie shop are back in business – and I suspect it won’t just be for the kids either.
The first 75 customers who take pics with the mascot and post on socials with designated hashtags will scoop a “mystery bag”. This savvy brand knows how to keep the hype going.
Weep (120 words)
A damning report into the economic outlook in Scotland’s rural communities has me concerned.
The findings predict depopulation in Dumfries and Galloway over the next 20 years could leave the area facing a socio-economic crisis.
The region has already seen a 2.5 per cent decrease in its population in the last decade, with numbers expected to fall below 140,000 for the first time by 2043.
An aging population is partly to blame, as well as slowing birth rates, but I can’t help but feel there’s a lack of infrastructure and economic opportunities compelling people to stay.
I hope local decision makers can get their heads together to address this and allow the proud and historic region to once again thrive.
