- The fraudsters have set up thousands of companies in their names, who then use the details to take loans or dupe consumers.
- The growing fraud, which is part of the country’s wider criminal epidemic, is getting no opposition from the Company House.
- Despite the government’s promise to enhance its powers, the Companies House is powerless to examine the correctness of the information furnished by any person forming a new company.
The fraudsters have set up thousands of companies in their names, who then use the details to take loans or dupe consumers.
Victims are always in fear of borrowers and the police link them with fake companies and loans.
Such increasing fraud, which is part of a wider criminal epidemic in the country, is finding no resistance from the Companies House, the official register of over four million limited companies in the country.
Despite the government’s promises to enhance its powers, the Companies House is powerless to examine the veracity of the information furnished by any person forming a new company.
Rise: Tens of thousands of people are setting up companies in their name by fraudsters who then use the details to get loans or defraud consumers
The result, an expert told The Mail on Sunday, is a cheater’s paradise.
Fraud is now reaching alarming levels in the UK. The amount stolen through such scams rose 30 percent to £754 million in the first half of this year.
For months, the MoS has campaigned for immediate action to ‘nall the scammers’, including coordinated action by the police, government and banks to tackle the crime wave.
Identity fraud – fraud by those setting up companies in the name of innocent consumers – has increased.
Cases registered in the first half of this year have increased by a quarter. Experts believe this is due to fraudsters finding ways to get their hands on the financial aid offered to legitimate struggling businesses during the pandemic.
One victim is 77-year-old Michael Waller, director of a specialist print company in Kent.
“I was shocked to receive a letter from Company House in May congratulating me on becoming a director of the newly formed Business Capital Financing Limited,” he says. ‘It was said that as director, I was legally responsible for running it.’
Michael had never heard of Capital Financing, doesn’t know what it does (if anything), or who is behind it, and is now facing a battle to get its details removed. Till now Michael is not aware of any loan taken in his name. But he fears it is only a matter of time.
How can this happen?
Facilitating this rise in identity fraud is the ease with which anyone can set up a company in the UK.
One can register a business with the Companies House for just £12 – without providing proof of identity. There is little to stop fraudsters from inputting any information they like – for example, details about the alleged directors of the business and their addresses.
The register is filled with bogus and bogus information. A quick search reveals that the registered company directors include Adolf Tooth Fairey Hitler and Stalin Stalin. Companies House simply registers whatever information it provides – there is no legal power to check or question it.
In fact, Martin Swain, director of strategy, policy and external communications at Companies House, recently acknowledged: ‘While sometimes, we know information is inaccurate or potentially fraudulent, the registrar needs to register it. required by law.’
After Michael Waller was fraudulently registered as a director of the company, he decided to set up a company himself, to see how easy it was to do so.
He was not asked for identification and with the help of his computer-savvy grandson, a firm called Fraud Prevent Ltd. was registered in 29 minutes.
Tony Hetherington, The Mail on Sunday Consumer Champion, says: ‘The drawback with Company House is that it is nothing more than a library. It depends on everyone being honest, which is not the case.
Informing the Companies House that the information about a registered company is incorrect is a waste of time, he says.
Once the information is accepted by the Companies House, it gains an air of legitimacy.
For example, banks often use it to help verify details about a company, its accounts and directors.
Helena Wood is an associate fellow in the Center for Financial Crime and Security Studies at the Royal United Services Institute in London. She says: ‘The company house register is not fit for purpose and we need action to rectify it.
‘There has been a lot of drag on the part of the government which has left victims exposed to identity fraud. This has compromised the reputation of the UK as a place to do business.
There are plans to increase the powers of the Company House. Wood says the details should be included in the Queen’s speech next year.
She adds: ‘Either the government doesn’t understand that bad Company House oversight is fueling the issue of fraud, or it does, but is willing to prioritize ease of doing business in the UK.’
Wood believes that in the coming months more people will discover that there are companies fraudulently registered in their names.
“It is likely that companies were set up in other people’s names to claim billions of pounds of bounce back loans and other financial aid during the pandemic,” she says. ‘If Company House had done a proper investigation, it would not have been so easy to misuse the system.’
Lenders generally do not rely on company house data to make loans. But during the pandemic, when it was important to provide a cash lifeline to struggling businesses, standards declined. The Parliamentarians’ Public Accounts Committee has warned that debt fraud will cost taxpayers hundreds of millions of pounds.
How do fraudsters work…