The Fraud Act 2006
is an Act
An Act of Parliament in the United Kingdom is a type of legislation called primary legislation. These Acts are passed by the Parliament of the United Kingdom at Westminster, or by the Scottish Parliament at Edinburgh....
of the Parliament of the United Kingdom
The Parliament of the United Kingdom of Great Britain and Northern Ireland is the supreme legislative body in the United Kingdom, British Crown dependencies and British overseas territories, located in London...
. It affects England and Wales
England and Wales is a jurisdiction within the United Kingdom. It consists of England and Wales, two of the four countries of the United Kingdom...
and Northern Ireland
Northern Ireland is one of the four countries of the United Kingdom. Situated in the north-east of the island of Ireland, it shares a border with the Republic of Ireland to the south and west...
. It was given Royal Assent
The granting of royal assent refers to the method by which any constitutional monarch formally approves and promulgates an act of his or her nation's parliament, thus making it a law...
on 8 November 2006, and came into effect on 15 January 2007.
The Act gives a statutory definition of the criminal offence of fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
, defining it in three classes - fraud by false representation, fraud by failing to disclose information, and fraud by abuse of position. It provides that a person found guilty of fraud was liable to a fine or imprisonment for up to twelve months on summary conviction (six months in Northern Ireland), or a fine or imprisonment for up to ten years on conviction on indictment
An indictment , in the common-law legal system, is a formal accusation that a person has committed a crime. In jurisdictions that maintain the concept of felonies, the serious criminal offence is a felony; jurisdictions that lack the concept of felonies often use that of an indictable offence—an...
. This Act largely replaces the laws relating to obtaining property by deception, obtaining a pecuniary advantage and other offences that were created under the Theft Act 1978
The Theft Act 1978 is an Act of the Parliament of the United Kingdom. It supplemented the earlier deception offences contained in sections 15 and 16 of the Theft Act 1968 by reforming some aspects of those offences and adding new provisions...
. These offences attracted much criticism for their complexity and difficulty in proving at court. Much of the Theft Act 1978 has been repealed, however, the offence of making off without payment, defined under section 3 has not been affected.
- "Fraud by false representation" is defined by Section 2 of the Act as a case where a person makes "any representation as to fact or law ... express or implied" which they know to be untrue or misleading.
- "Fraud by failing to disclose information" is defined by Section 3 of the Act as a case where a person fails to disclose any information to a third party when they are under a legal duty to disclose such information.
- "Fraud by abuse of position" is defined by Section 4 of the Act as a case where a person occupies a position where they are expected to safeguard the financial interests of another person, and abuses that position; this includes cases where the abuse consisted of an omission rather than an overt act
In criminal law, an overt act , an open act, one that can be clearly proved by evidence, and from which criminal intent can be inferred, as opposed to a mere intention in the mind to commit a crime...
In all three classes of fraud, it requires that for an offence to have occurred, the person must have acted dishonestly, and that they had to have acted with the intent of making a gain for themselves or anyone else, or inflicting a loss (or a risk of loss) on another.
Gain and loss
A "gain" or a "loss" is defined to consist only of a gain or a loss in money or property (including intangible property), but could be temporary or permanent. A "gain" could be construed as gaining by keeping their existing possessions, not just by obtaining new ones, and loss included losses of expected acquisitions, as well as losses of already-held property.
The Act will establish two "supporting" offences, these being the possession of articles for use in frauds (Section 6) and the making or supplying of articles for use in frauds (Section 7).
Obtaining services dishonestly
Section 11 of the Act makes it a statutory offence to obtain services dishonestly; meaning that services which were to be paid for were obtained with the knowledge or intention that no payment would be made. A person found guilty of this will be liable to a fine or imprisonment for up to twelve months on summary conviction (six months in Northern Ireland), or a fine or imprisonment for up to five years on conviction on indictment.
Companies and fraudulent business
In regard to the fraudulent behavior of companies, the existing offence of participating in fraudulent business carried on by a company, provided for by the Companies Act 1985
The Companies Act 1985 is an Act of the Parliament of the United Kingdom of Great Britain and Northern Ireland, enacted in 1985, which enabled companies to be formed by registration, and set out the responsibilities of companies, their directors and secretaries.The Act was a consolidation of...
, was amended by Section 10 - bringing the maximum penalty from 7 years imprisonment to 10 years - and a new offence of participating in fraudulent business carried on by a sole trader was established by Section 9.
Section 12 of the Act provides that where an offence against the Act was committed by a body corporate, but was carried out with the "consent or connivance" of any director, manager, secretary or officer of the body - or any person purporting to be such - then that person, as well as the body itself, is liable.
An important difference between this and the Theft Act is that the Fraud Act offences do not require there to have been a victim, as was the case with the Theft Act.
Some Trading Standards services have already used the Act against bogus charity collectors and it will be used for some matters that are currently dealt with under the Trade Descriptions Act 1968
The Trade Descriptions 1968 is an Act of the Parliament of the United Kingdom which prevents manufacturers, retailers or service industry providers from misleading consumers as to what they are spending their money on....
(e.g. car-clocking) when that Act is repealed in Autumn 2007.