Schofield & Associates: New Failure to Prevent Fraud Offence - What Employers Need to Know

1st October 2025

On the 1st of September 2025, the new "failure to prevent fraud" offence came into force under the Economic Crime and Corporate Transparency Act 2023. Organisations could face criminal liability if an employee, agent or associated person commits fraud for the benefit of the company, unless it can be proved that reasonable fraud prevention procedures were in place.

Which companies are affected?

The offence applies to large businesses that meeting 2 out of 3 of the the following criteria:

• More than 250 employees
• Turnover of £36 million
• Balance sheet of over £18 million

Why SMEs may be affected?

Whilst the majority of SMEs won't fall within the above criteria, they may still be impacted:

• Acting as suppliers or contractors to large organisations means that tighter contract terms could be faced.
• Large businesses may demand evidence of anti-fraud policies within staff handbooks and training before engaging SMEs.
• Being able to show strong compliance could give a competitive advantage in securing work with larger businesses.

Safeguarding your business: key steps to take

• Conduct a fraud risk assessment – identifying areas of exposure
• Draft documents to ensure reasonable prevention of fraud
• Training, awareness, and clear reporting lines – ensuring that employees, agents and third parties are aware of fraud risks and ways to escalate concerns
• Monitoring and auditing – use internal review systems to assess effectiveness
• Board and senior management engagement – integrate fraud oversight into governance

How we can help at Schofield & Associates and Schofield HR?

• Strengthening whistleblowing and investigating procedures
• Reviewing and drafting
• Reviewing and drafting up-to-date and legally compliant anti-fraud policies to ensure reasonable fraud prevention
• Updating contracts, handbooks and complaint procedures
• Providing staff and management training
• Supporting investigations and disciplinary action

Conclusion

The new "failure to prevent fraud" offence will impact both larger and smaller businesses. At Schofield & Associates, we're here to help minimise risk, protect your business by ensuring that robust fraud prevention procedures are in place. This includes reviewing policies, contracts and handbooks, providing training and advising on investigations and disciplinary processes if needed.

If you're looking for advice, then we're here to help.

Contact us at:

Eileen Schofield for Employment Law advice on eileen.schofield@schofieldandassociates.co.uk - 01564 334614

Derri Moran for HR advice on derri.moran@schofieldhr.co.uk - 07508 741505

To visit our main website pages, follow:

https://www.schofieldandassociates.co.uk/

https://www.schofieldandassociates.co.uk/hr