Formal strategy needed to manage bounce back loan fraud, says NAO

Counter-fraud activity for the bounce back loan scheme was implemented too slowly to be effective and government’s activity to limit taxpayers’ exposure to fraudulent loans is inadequate according to a report from the National Audit Office (NAO).

When the Department for Business Energy and Industrial Strategy (BEIS) launched the scheme in May 2020 there was limited verification and no credit checks on borrowers which made it vulnerable to fraud and losses. Indeed in March 2021 the department estimated that 11% of bounce back loans worth £4.9bn were fraudulent.

Around a quarter of all UK businesses have applied to the scheme and 1.5 million bounce back loans worth £47bn have been made. More than 90% of these (£39.7bn) went to micro-businesses with a turnover below £632 000.

In March 2021 BEIS estimated that 37% of these loans worth £17bn will not be...