’Reviewing and strengthening anti-fraud controls is critical and everyone in the industry should be working together to inform and equip their clients,’ says head
RSA has urged the industry to prepare for the Failure to Prevent Fraud (FTPF) offence, a new piece of legislation that could see thousands of businesses face criminal liability.
Coming into effect on 1 September 2025, the new rule, introduced under the Economic Crime and Corporate Transparency Act 2023, places a legal obligation on organisations to implement robust fraud prevention procedures.
If an employee, agent, or supplier commits fraud for the organisation’s benefit, the organisation may face prosecution.
The legislation’s remit applies to any company or partnership that meets two of three criteria, namely, over 250 employees, more than £36m in annual turnover, or exceeding £18m in total assets
RSA said that according to government figures, nearly 25,000 businesses could face criminal liability under this legislation, “which marks a significant shift in corporate accountability”.
In turn, the insurer is calling on the insurance industry to help clients understand and manage this emerging risk.
Adele Sumner, head of counter fraud strategy and financial crime at RSA, said: “The strategic objective of the legislation is clear, reduce fraud by embedding stronger controls. One of the ways to reduce the risk is to ensure your organisation has reasonable procedures in place to prevent fraud.
“Reviewing and strengthening anti-fraud controls is critical and everyone in the industry should be working together to inform and equip their clients on how best to sidestep this potential landmine.”
Support on offer
To support businesses, RSA is providing access to expert guidance, tools and resources to help organisations assess their risk and implement or strengthen fraud prevention procedures.
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The insurer will also be working closely with brokers to help them support clients through the transition.
Sumner said: “We are here to support our brokers and customers in understanding the nature of the legislation as we move through the initial months, to prevent these new rules having a potentially devastating impact on businesses.
“Fraud is endemic across all levels of our economy, so it’s not surprising that the legislation aims to cover a wide number of businesses. Indeed, it is expected that up to 11,000 mid-sized organisations with between 250 and 500 employees, may now find themselves in scope of the new regulations.
“The risk for smaller firms is that they are not equipped with strong internal fraud controls and many may not realise they could face criminal liability even if they weren’t aware fraud had occurred.”
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