Mortgage fraud now 20% of UK total

Mortgage fraud made up a fifth of the total £1bn reported in the UK during the first half of the year.

The main types of financial crimes include under-reporting of revenue and VAT avoidance.

Mortgage fraud now accounts for 20% of all reported fraud cases with around half of total fraud occurring in finance or insurance.

For the first six months of this year fraud losses eclipsed previous half year figures and were almost the same as for the whole of 2008.

It is the first time fraud levels have soared above the £1bn barrier during the interim period in the seven years accountants BDO have been conducting its market leading survey.

The average amount of each type of fraud had risen to almost £6m from £5m last year

About 16% of all reported fraud came from management falsifying the accounts of their own companies.

Simon Bevan, head of the fraud services unit at BDO, says the increase could not be blamed on the economic downturn.

However, the period of austerity brought greater scrutiny and a higher number of laid-off employees prepared to blow the whistle on illegal practices.

Another growing trend identified by BDO is where managers of companies commit fraud by either setting up "companies within companies" or diverting lucrative contracts away to accomplices.

"Linked to this unethical activity is an increase in insider dealing where management don't directly defraud their own employer but their actions leave them open to stringent, and often public, enforcement action by financial regulators," Bevan says.

The BDO data, published every six months, may understate the scale of the problem, because only cases that have been publicly reported to authorities are included.