Fraudsters stole £4.9bn from Bounce Back Loan scheme, watchdog finds

Covid fraudsters stole £4.9bn from Bounce Back Loan scheme after government took a month to put in basic checks once £28bn had already been paid out, watchdog report finds

  • Covid loan anti-fraud checks were inadequate, the spending watchdog said
  • Fraudsters stole estimated £4.9billion from the Bounce Back Loan scheme
  • Basic measures were only put in place after £28billion had been paid out
  • Fraudsters stole nearly £5billion from the Government’s Covid Bounce Back Loan scheme because basic anti-fraud measures were ‘inadequateand were only put in place once more than £28billion had already been paid out, the spending watchdog has said.

    Checks to ensure that a company was not applying for more than one bounce back loan were not put in place until June 2020, a month after the scheme was launched, according to a report by the National Audit Office.

    그때까지, 61 per cent of the money that was to be lent under the scheme had already been paid out to businesses.

    Other counter-fraud activities did not begin until September 2020 as the Government focused on getting out the loans to support struggling companies.

    보고서에서, the NAO said the Government estimated that more than a third of loans, worth £17billion, may never be repaid due to both fraudulent activity and legitimate borrowers defaulting.

    Auditing giant PwC, which has been hired by the Government, has estimated 7.5 per cent of loans might be lost to fraud, at a potential £3.5billion cost to the taxpayer. 하나, the report notes that the Government estimated fraudulent loans were worth £4.9billion as of March.

    The Government knew the risks as it launched the scheme, but had to weigh them against the consequences of not getting money to businesses rapidly, the spending watchdog added.

    ‘Government prioritised getting bounce back loans to small businesses quickly but failed to put adequate fraud prevention measures in place. One impact of these decisions is apparent in the high levels of estimated fraud,’ said NAO boss Gareth Davies.

    The Government only put in some basic anti-fraud checks on the small Covid loans it was providing to businesses once more than £28 billion had already been paid out, the spending watchdog has said

    The Government only put in some basic anti-fraud checks on the small Covid loans it was providing to businesses once more than £28 billion had already been paid out, the spending watchdog has said

    The bounce back loans propped up 1.5 million businesses, potentially saving many from bankruptcy. Many businesses were also paid within 24 ...에 48 hours of submitting an application (스톡 이미지)

    The bounce back loans propped up 1.5 million businesses, potentially saving many from bankruptcy. Many businesses were also paid within 24 ...에 48 hours of submitting an application (스톡 이미지)

    What was the Bounce Back Loan scheme? And what did the spending watchdog’s report find?

    What was the Government’s Bounce Back Loan scheme?

    As well as furlough support, companies were able to claim money from the Coronavirus Business Interruption Loan Scheme (CBILS) and the Bounce Back Loan Scheme (BBLS), which was aimed at small companies.

    The pressures the Government faced to rapidly hand out Covid loans meant that banks did not carry out some standard checks before they granted the loans.

    BBLS provided up to £50,000 to small firms, with most cash going to companies with fewer than ten employees.

    The Government has underwritten 80 per cent of all CBILS loans and 100 per cent of BBLS lending – though banks will probably need to exhaust all their options before asking the taxpayer.

    Some lenders have already started paying to have companies reinstated on Companies House in an attempt to recover the debt.

    In the March Budget, Chancellor Rishi Sunak announced that £100million would be used to fund a taskforce of 1,000 investigators in HM Revenue & Customs to crack down on the misuse of the furlough and self-employment income support schemes.

    What did the National Audit Office’s report find?

    The spending watchdog found that fraudsters stole billions through the scheme.

    The NAO found that the Government had acted too slowly to implement basic anti-fraud measures and that these checks were ‘inadequate’.

    The Government knew the risks as it launched the scheme, but had to weigh them against the consequences of not getting money to businesses rapidly, the spending watchdog added.

    Checks to ensure that a company was not applying for more than one bounce back loan were not put in place until June 2020, a month after the scheme was launched, according to a report by the National Audit Office.

    그때까지, 61 per cent of the money that was to be lent under the scheme had already been paid out to businesses.

    Other counter-fraud activities did not begin until September 2020 as the Government focused on getting out the loans to support struggling companies.

    Auditing giant PwC, which has been hired by the Government, has estimated 7.5 per cent of loans might be lost to fraud, at a potential £3.5billion cost to the taxpayer. 하나, the report notes that the Government estimated fraudulent loans were worth £4.9billion, 11 전체의 퍼센트, 3 월 현재.

    광고

    A Department of Business spokesman said: ‘The Government support schemes have provided a lifeline to millions of businesses across the UK – helping them survive the pandemic and protecting millions of jobs.

    ‘We are continuing to crack down on Covid-19 fraud and will not tolerate those that seek to defraud the British taxpayer.

    ‘We are working closely with lenders and enforcement authorities to minimise fraud and ensure those that have committed fraud face consequences.

    The bounce back loans propped up 1.5 million businesses, potentially saving many from bankruptcy.

    Many businesses were also paid within 24 ...에 48 hours of submitting an application.

    대신, the Government has focused on detecting problems after the loans have been paid out. But the NAO criticised some of the approach to this.

    The business department has used the National Investigation Service (Natis), a law enforcement body, to track down major fraud in the scheme.

    But Natis only has the capacity to pursue at most 50 cases per year. It received more than 2,100 intelligence reports by October this year.

    그 동안에, the Government is relying on banks to police midsize and small fraud.

    Banks provided the loans to businesses, but Ministers have promised to fully reimburse the lenders if loans are not repaid.

    By April, lenders claimed to have stopped nearly £2billion in fraudulent loans from going out, and discovered £5.3million that had been paid.

    The scheme was administered by the British Business Bank on behalf of the Government.

    The bank’s chief executive Catherine Lewis La Torre said: ‘The bank welcomes the NAO’s findings thatmost of the loans – over 90 퍼센트, or £39.7billion – went to micro-businessesand thatbusinesses have found the loans useful to address cashflow shortages during the pandemic”.

    ‘This is supported by the bank’s own research which findsthat about 70 per cent used the funds for working capital and day-to-day expenses”.

    ‘The bank also welcomes the finding thatmost businesses have started to repay loans”, evidenced by recent data published by the Department for Business, 에너지 & Industrial Strategy (BEIS) and the bank, showing the overwhelming majority of businesses are meeting their monthly repayments.

    ‘From the launch of the scheme, the British Business Bank has worked with lenders and across government to prevent, detect and counter fraud and put in place as quickly as possible additional measures to further mitigate fraud risks.

    Federation of Small Businesses national vice chair Martin McTague said: ‘When they created Bounce Back Loans last summer, the Government and British Business Bank were faced with an extremely difficult task: getting cash into as many of these small firms as possible, as quickly as possible, whilst rightly doing all they could to shut out fraudsters in a fast-moving situation.

    ‘After weeks of the original interruption loan scheme simply not working for the smallest firms most in need, hold ups with the bounce back programme would have been catastrophic.

    As well as furlough support, companies were able to claim money from the Coronavirus Business Interruption Loan Scheme and the Bounce Back Loan Scheme, which was aimed at small companies.

    In the March Budget, Chancellor Rishi Sunak announced that £100million would be used to fund a taskforce of 1,000 investigators in HM Revenue & Customs to crack down on the misuse of the furlough and self-employment income support schemes.

    In the March Budget, Chancellor Rishi Sunak announced that £100million would be used to fund a taskforce of 1,000 investigators in HM Revenue & Customs to crack down on the misuse of the furlough and self-employment income support schemes.

    The pressures the Government faced to rapidly hand out Covid loans meant that banks did not carry out some standard checks before they granted the loans.

    BBLS provided up to £50,000 to small firms, with most cash going to companies with fewer than ten employees.

    The Government has underwritten 80 per cent of all CBILS loans and 100 per cent of BBLS lending – though banks will probably need to exhaust all their options before asking the taxpayer.

    Some lenders have already started paying to have companies reinstated on Companies House in an attempt to recover the debt.

    In the March Budget, Chancellor Rishi Sunak announced that £100million would be used to fund a taskforce of 1,000 investigators in HM Revenue & Customs to crack down on the misuse of the furlough and self-employment income support schemes.

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