Failure to Prevent Fraud Offence: The law is now in force – but it’s not too late to act

The UK’s new Failure to Prevent Fraud Offence (FtP) officially came into force on 1 September 2025. The legislation introduces criminal liability for organisations – including public sector bodies – if an “associated person” commits fraud intending to benefit the organisation. Those who fall foul, risk unlimited fines and reputational damage.

The message from Government and regulators is clear: the time for preparation is over – the time for action is now.

Fraud today accounts for an estimated 43% of all crime in England and Wales. In the public sector, the consequences are even more significant: fraud and error cost the taxpayer up to an estimated £81 billion in 2023-24 alone. That’s money meant for vital public services – lost to deception, mismanagement, and weak controls.

While the legislation is now live, it’s not too late to build defences against fraud. Organisations that act decisively – even now – can still demonstrate leadership, protect public funds, and avoid liability.

As Director of the Serious Fraud Office, Nick Ephgrave, warned: “Come September, if they haven’t sorted themselves out, we’re coming after them… Someone needs to feel the bite.”

However, this isn’t the time to panic. It’s about proactive governance, accountability, and public trust. The law is here, but so is the opportunity to get it right

What to do – starting now

1. Reassess your organisational fraud risks

The offence applies to fraud committed from 1 September 2025 onwards – and ignorance is no defence.

A robust, documented fraud risk assessment is the foundation of any reasonable prevention strategy.

Key actions:

• Map out high-risk areas: procurement, commissioning, grant funding.
• Identify gaps in controls, reporting lines, and whistleblowing mechanisms.
• Assign clear ownership and ensure regular updates.

Risk assessments must be living documents, reviewed regularly and adapted to emerging threats.

2. Strengthen oversight of staff and third parties

Under FtP, liability extends to contractors, consultants, and delivery partners. If they commit fraud to benefit your organisation, your organisation could be held criminally liable.

Key actions:

• Implement robust pre-employment screening and ongoing monitoring.
• Embed fraud prevention clauses in third-party contracts.
• Ensure senior leaders understand their responsibilities – liability can arise from their actions or omissions.

This is especially critical for public bodies with complex supply chains or outsourced services.

3. Deliver targeted training and build an anti-fraud culture

Fraud prevention is everyone’s responsibility. Awareness must be embedded from the frontline to the boardroom.

Key actions:

• Train senior leaders and Audit Committees on the offence’s implications.
• Roll out tailored fraud awareness training by role and risk exposure.
• Promote accessible whistleblowing channels and a culture of transparency.

The guidance stresses the importance of top-level commitment and continuous communication.

4. Don’t wait for the thresholds to apply

Even if your organisation doesn’t meet the size thresholds (turnover, balance sheet, employee count), your organisation could still be liable. The offence applies if fraud is committed under UK law or targets UK victims – regardless of where the perpetrator is based.

Build your defence now

The legislation is clear. The enforcement bodies are ready. And the cost of inaction is too high.

Public sector organisations as well as businesses must act decisively and act now. This is not just about avoiding prosecution. It’s about safeguarding public money, protecting your people, and upholding the trust placed in you by the communities you serve.

Start today. Assess your risks. Train your teams. Strengthen your controls.

Because now that the law is in force, the question won’t be “Did you know?” — it will be “What did you do?”

Cifas will be unpacking the early implications of the Failure to Prevent Fraud Offence in a series of webinars taking place on 16 September, 15 October, 18 November and 2 December. Find out more and register for free here.