Financial Times

Fraud victims ignored by government, says study

By Ben Hall,Political Correspondent

Published: August 20 2007 03:00 | Last updated: August 20 2007 03:00

Victims of fraud and corporate scams often suffer more than victims of violent crime but are largely ignored by the government, according to a study published today.

The research for the Centre for Crime and Justice Studies at King's College found that victims of corporate crime are affected on a number of fronts "producing emotional, psychological, behavioural, physical and financial reactions that can be long-lasting".

However, the true extent and effects of white-collar crime are understated because fraud is not recorded in the British crime survey, the principal measure of criminal activity.

The government does little to protect potential victims of corporate fraud or help those who have suffered at the hand of rogue operators, the report says. It takes issue with the presumption of regulators that the best protection for consumers of financial products is information and freedom of choice.

Basia Spalek, a criminologist at the University of Birmingham who wrote the report, based her findings on interviews with victims of the Maxwell pension scheme scandal and of the collapse of the Bank of Credit and Commerce International.

She found government victim support schemes were focused on violent crime. "Individuals experiencing financial crimes and abuses have been largely overlooked," she said.

"There is little political incentive to document the costs and impacts of white collar crime because this would mean an increase in the overall level of victimisation recorded in the UK." Dr Spalek said the success of the financial services industry was based on the presumption that the best form of protection for consumers was buyer beware.

But often the victims of financial crime were employees of the rogue companies in question. At the same time, consumers have been pushed into the market for financial products, such as private pensions, she said.

The Financial Services Authority, the City watchdog, should take on more responsibility for helping the victims of white-collar crime. "The FSA lacks an appreciation of the nature of financial crime and the significant impact upon victims, its policy documents referring solely to financial compensation, as though this were the only effect on individuals caught up in a financial scandal," she said.

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