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Bounce Back Loan Fraud Prevention

There have been various parliamentary reports and government reports about Bounce Back Loan Scheme fraud prevention that appear to suggest that checks may not have been comprehensive when the scheme was launched.

There has also been criticism referred to in the press about the absence of fraud prevention when bounce back loans were issued. Treasury minister Lord Agnew quit the government over its handling of Covid loan fraud.

Public Accounts Committee Report 18 May 2022

The Public Accounts Committee on 18 May 2022 in Department for Business, Energy & Industrial Strategy Annual Report and Accounts 2020-21 – Report Summary said:

Given the Department had anticipated a heightened risk with these schemes, we are disappointed that it does not appear to have used all the tools at its disposal to minimise fraud and error.

So it seems there was a known increased risk before schemes were issued and yet not all checks and balances appear to have been put in place.

Government Policy Paper 3 March 2022

However, this position appears not to match what was said in the policy paper Government Action on Fraud in Covid Support Schemes in the updated version on 3 March 2022:

Rigorous checks were put in place to prevent fraud when these schemes were launched…

Freedom Of Information Act Request: Bounce Back Loan Fraud Prevention

Our CEO, Elliot Green issued a Freedom of Information Act request seeking details of the “rigorous checks” that were put in place to prevent fraudulent bounce back loan applications from succeeding and evidence of that position.

However, in a letter dated 18 May 20220, HM Treasury rejected our CEO, Elliot Green‘s Freedom of Information Act Request for disclosure on the Bounce Back Loan Scheme (the BBLS”) of the:

Rigorous checks … were put in place to prevent fraud when the schemes were launched.

He is now appealing that decision and has sought an internal review.

HM Treasury’s rejection was based on the exemption set out in Section 31(1)(a) of the Freedom of Information Act 2000 to prevent crime. It says that the release of the information sought:

… would aid a criminal intent in perpetrating fraud against the scheme by providing details of how fraud will be identified and tackled by lenders and law enforcement … also create a vulnerability to criminal activity more broadly against the scheme.

HM Treasury did disclose the following in its letter:

… we can confirm that lenders were required from the outset to make certain counter-fraud checks and know-your-customer checks under the scheme (for example, using a reputable fraud bureau to screen against potential or known fraudsters and seeking evidence that the applicant was carrying on their business by the required date of establishment to be eligible for the scheme). Under the scheme rules, failure by lenders to take the appropriate steps would result in a claim on the guarantee for the loan(s) in question being invalid.

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Disclaimer: Bounce Back Loan Fraud Prevention

This page Bounce Back Loan Fraud Prevention is not legal advice and should not be relied upon as such. This article Bounce Back Loan Fraud Prevention is provided for information purposes only. You can contact us on the specific facts of your case to obtain relevant advice via a Free Initial Consultation.

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