The Fraud Act 2006 - Essay Example

Critically evaluate whether the Fraud Act 2006 has improved the law on fraud. The issue in this question requires an analysis of the law on fraud before the Fraud Act 2006, what changes were brought about by the Act and how successful has the act been in reforming the law on fraud. Each of these will now be discussed. In April 1998, the Law Commission as per the instructions of the Home Secretary, analyzed the law on fraud, taking into account the clarity of the juries on the law; the adequacy of the law on fraud for effective prosecution; whether the law was fair to potential defendants; whether it was in line with the developing technology; and finally after such factors were considered, to make recommendation so as to improve the law in these respects. The focus of the Commission’s report had one two different and competing objectives. The first one being that of enhancing the scope of the criminal law of fraud so as to prosecute fraudsters successfully and award them with appropriate sentence, however, this had to be balanced so that unacceptable restriction were not placed on personal freedom or the law to become so vague that it would be contrary to rule of law. The other one was to do away with the weak and inconsistent conspiracy to defraud, under which it was a crime for two people to agree to do something which, in the absence of an agreement, either of them could lawfully do. The Commission went on to conclude that if a general fraud offence would be introduced, criminal law could be improved as they thought it would be more understandable by juries. The charges which were being used in such trials were numerous, and in their opinion none of them gave a clear meaning of “fraud”. The statutory offences in their opinion were too specific and so did not provide a clear portrayal of fraud; and the common law offence of conspiracy to defraud was wide and it was not of much help when looking for a distinction between fraudulent and lawful conduct.1 Further, it was stated that a general offence of fraud would lead to effective prosecution, as there had been times when certain specific offences were charged wrongly as there were other suitable offences. Further, there were cases under conspiracy to defraud brought about by prosecution which would never have been charged if a generalized crime with a clear definition had been there. Thus, such problem had lead to higher costs of appeal and unfair acquittals Finally, a single crime of fraud in the opinion of the Commission would have led to simplification of the law of fraud, which would be helpful in determining whether an act was criminal and when a defendant would be charged he could weigh his options in a more appropriate manner. Thus the recommendations were to abolish the eight offence of deception under the Theft Act 1968-96 and to abolish conspiracy to defraud and to create two statutory offences that is one of fraud and one of obtaining services dishonestly.2 On the recommendation of the Commission, the Act abolished the eight offences under Theft Act 1968. However, the Home Office’s consultation opposed the abolition of conspiracy to defraud, as they clearly wanted to see how the ne statutory offences worked in practice before abolishing it. There has been a reassessment asked for by the Government from the Commission as to the need to preserve conspiracy to defraud in view of the new statutory offences. The Fraud Act 2006 came into force on 15/1/07 and has, to a great extent changed the landscape of fraud. The Act makes it easier for a defendant to understand the offence on the one hand and is much easier to prosecute as far as the Crown is concerned on the other. The single offence of fraud that has been created in section 1 can be said to be the cornerstone of the act. The offence can be created in one of three different ways. The first one is fraud by false representation, under which a person is in breach if he dishonestly makes a false representation with intent to gain or cause loss to another, or to expose another to risk of loss. The offence thereby only requires that the maker of the statement knew of it, or might have known it to be, untrue or misleading and in its second part does not require actual or even the risk of loss. This offence can be used to prosecute ‘boiler room’ frauds’ and in the current scenario alleged mortgage fraud. However, there are certain difficulties which the prosecution might face for example where a substantive charge is being faced, each representation must be made separately where each of the representation was made for separate gain/loss. This arises because each of the representation is classified as a different offence, which was not so under the old Act where a single offence of obtaining by deception would have sufficed (S.15 of the 1968 Act). The second offence is that of fraud by failure to disclose, under which a person is in breach “dishonestly fails to disclose to another person information which he is under a legal duty to disclose and he intends thereby to make a gain for himself or cause a loss, or risk of loss, to another”. This offence clearly makes certain offences criminal, which were pure civil disputes before the implementation of the Act. The main examples that can be cited are breach of banking covenants whereby the borrower is under an obligation to notify the bank of an event of termination; shill bidding on online auction site, that is the seller create a second identity in order to increase the price of their own items; some advertising techniques and practices; and breach of fiduciary duty by directors.3 The next offence is that of fraud by abuse of position under which an offence is committed if a person who occupies a post under which he/she is expected to safeguard, or not act against, the financial interests of another dishonestly abuses his position intending to gain for himself or to cause loss, or risk of loss, to another. Clearly, this offence covers corruption type offences.4 The Fraud Act also creates other offences like possession of articles for use in fraud (s.7) and dishonestly obtaining services (s.11). The latter one replaces the offence of obtaining services by deception under the 1978 Act, thereby replacing deception with dishonesty and so the prosecution do not need to prove that any deception was operative or had any effect on the victim and so only the state of mind of the defendant counts.5 The Act also restricts the right to claim privilege by a defendant against self-incrimination (a right whereby the defendant may refuse to reveal document or provide evidence if such an act would make it a risk of criminal prosecution) if he is charged with an offence of fraud.6 The Home Office will be reviewing the practical implications and operation of the new offences after a period of 3 years in operation. This review would look at the abolition of the conspiracy to defraud as well. There has been a separate guidance issued by the Attorney General to prosecutors in order to facilitate them with the use of the common law crime in the light of the Fraud Act. Even though the Act has adjusted fraud to technological changes and made the law on fraud less complex in certain and despite the fact that the Act may clarify and simplify the law in different aspects, there are certain problems which have been created from the Act and these will clearly be seen when there is sufficient case law on the Act and how it is interpreted. . Bibliography Ashworth, Andrew. Principles of Criminal Law. Oxford: Oxford University Press, 2009. Print. Clarkson, C M. V, Heather M. Keating, Sally Cunningham, and C M. V. Clarkson. Criminal Law: Text and Materials. London: Sweet & Maxwell, 2010. Print Glazebrook, P R. Criminal Law 2008-2009. Blackstones statute books. Oxford: Oxford University Press, 2008. Print. Ormerod, D C, J C. Smith, and Brian Hogan. Smith and Hogan Criminal Law. Oxford: Oxford University Press, 2008. Print. Ormerod, D C. Smith and Hogan Criminal Law: Cases and Materials. Oxford: Oxford University Press, 2009. Print Simester, A P, and G R. Sullivan. Criminal Law: Theory and Doctrine. Oxford: Hart, 2009. Print. Read More