Fraud-friendly faults in bounce back loan scheme
In April 2020, the Bounce Bank Loan program was established with the goal of keeping small companies afloat during the coronavirus pandemic. The National Audit Office's assessment of the government's fraud prevention procedures for the Covid-19 Bounce Back Loan Scheme, published as a year-end report, has a strong "could do better" tone to it.
The NAO has deemed the government's efforts insufficient and has stated that revisions are required if the estimated £5 billion lost is recovered. It has cited a current focus on organized crime's attempts to exploit the program, claiming that this will result in many lower-level fraudsters going unreported or unpunished.
The emphasis was on distributing the money as quickly as possible with the bare minimum of checks under a scheme that insured bank loans of up to £50,000 to aid businesses during the outbreak. Like bees to a honey pot, this was always going to attract con artists. So it's no surprise that the NAO has now said unequivocally that the fund was prone to fraud and losses – and that this was still the case after seven months of existence.
HM Revenue and Customs will have to devote substantial resources to recoup the losses. It will also mean that regulated professions will be scrutinized, with HMRC and other enforcement agencies to see if reporting requirements have been completed.
The NAO's portrayal of the situation is undeniably pessimistic. It shows a condition in which the authorities are scrambling to reclaim money that should never have been given out in the first place.