RSA Insurance is asking the industry to prepare for the Failure to Prevent Fraud (FTPF) offence, which comes into effect on 1 September 2025.
The Failure to Prevent Fraud offence, introduced under the ‘Economic Crime and Corporate Transparency Act 2023’ (ECCTA) 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 ECCTA’s remit is wide ranging and applies to any company or partnership that meets two of three criteria, namely, over 250 employees, more than £36 million in annual turnover, or exceeding £18 million in total assets*.
According to government figures, nearly 25,000 businesses could face criminal liability under this legislation, which marks a significant shift in corporate accountability. RSA 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."
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. The insurer will also be working closely with brokers to help them support clients through the transition.
Sumner, continued: “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.”
ENDS
Notes:
*Companies Act 2006 definition
Media enquiries:
David Stewart
David.Stewart@uk.rsagroup.com
Tel: +44 (0) 7971 182 813
About RSA Insurance, an Intact company
RSA Insurance is one of the world’s longest-standing general insurers, providing peace of mind to individuals and protection for businesses of all sizes. With operations in the UK, Ireland and continental Europe, RSA delivers insurance solutions through direct channels, broker relationships and strategic partnerships.
In 2021, RSA became a wholly owned subsidiary of Intact Financial Corporation, a North American leader in property and casualty insurance. Intact has a strong legacy of investing in climate adaptation and has funded more than 100 community resilience projects across Canada.
For more information or to access RSA’s fraud prevention resources, contact pressoffice@uk.rsagroup.com or visit: www.rsainsurance.co.uk