The Serious Fraud Office should be reshaped as a regulator

Recent reviews have highlighted difficulties around criminal disclosure in complex frauds as a barrier to successful prosecution. Defence lawyers can attempt to halt cases for “abuse of process” and if that fails rely on juries to be bewildered into acquittals.
More generally, despite fraud being by far the most common crime in the UK, the number of fraud convictions has fallen from 12,378 in 2012 to a tiny 3,455 in 2022. It appears that the criminal courts are a greater deterrence to law enforcement in economic crime than they are to the offenders.
As we argue in a paper published last week, the transparent focus by the Serious Fraud Office (SFO) on “serious” economic crime should be maintained. But its approach to justice should be broadened by adding a wider range of regulatory and civil justice tools to its arsenal under a new serious economic crime office.
Indeed, by adopting regulatory-style deferred prosecution agreements in corporate bribery cases, the SFO has already recalibrated its justice purpose. The regulatory nature of the agreements is evident in their justice outcomes: retribution and deterrence by way of large fines and rehabilitation by the requirement to establish meaningful ethics programmes.
By further building on this move away from the criminal regime, the SFO’s ultimate purpose in controlling crime would be more effective and therefore better serve the public good. But this requires radical change.
For example, it should adopt the closed-door regulatory practices of the UK’s Competition and Markets Authority and the European Commission in their price-fixing cartel cases, which are among the most serious economic crimes. It should borrow from the US Department of Justice and support civil litigation.
Some other regulatory measures it could pursue include “ethics orders”, where companies are compelled to implement a compliance programme. The creation of a “register for serious economic crime offenders”, where offenders are placed on it for a period of time with constraints on holding directorships and conducting professional roles, should also be considered.
• Serious Fraud Office should be replaced after ‘high-profile failures’
The creation of the “failure to prevent” offences in bribery, tax, money laundering and now fraud provides the opportunity for the proposed office to lead on promoting prevention, setting standards and offering advice to companies. Supporting small and medium businesses to prevent economic crime, which is a huge gap at present, could also be a function.
We should follow the example of New Zealand’s Serious Fraud Office and take the lead in developing economic crime prevention policies and practices. Prevention is ultimately better than a cure.
Such developments would radically reshape the SFO well beyond its original purpose. The revitalised and expanded agency would retain the functions of the SFO but become a regulator with prosecution powers.
Professor Mark Button is the co-director of the Centre for Cybercrime and Economic Crime at Portsmouth University and co-author, with Branislav Hock and David Shepherd, of “Replacing the Serious Fraud Office” published by the Institute of Economic Affairs