Funding cuts hampering public agencies' ability to recover fraud victims' stolen assets, says expert

Alan Sheeley, a civil fraud and asset recovery expert at Pinsent Masons, the law firm behind Out-Law.com, said that recent press reports about the "failings" of Action Fraud showed that the best interests of the public did not always correspond with the best interests of the individual victim. The work of Action Fraud and other public bodies was also subject to funding and cutbacks, he said.

"If a government organisation has the resources to investigate a fraud, its primary goals are to stop the fraud happening again and to imprison the fraudster," he said. "Asset recovery is usually considered more as an afterthought. This can give fraudsters time to dissipate the assets resulting in no recovery for the victim, as evidenced by government statistics showing that only 26p in every £100 ordered to be paid is recovered."

"With the ease with which money can transfer through global internet banking a victim's only real recourse, if they want money back, is to control the investigation by securing the assets immediately through the use of specialist civil fraud solicitors. After this has been achieved, the solicitor will then hand files over to the relevant government organisation which can then consider custodial sentences, as usually the victim has been financially recompensed," he said.

"Government organisations should be more open over what their true objectives are, and what their recovery rates for victims are, every time a fraud is reported to them. They should be duty-bound to advise victims of all possible routes open to them including civil fraud proceedings. At least this way, victims will be fully informed and know the limitations of each possible route before embarking on helping government organisations in what can be many years of protracted investigation leading to no financial recovery for the victim," he said.

This week, retired teacher Philip Fryer described the government-backed Action Fraud service as "a joke" in an interview with the Daily Mail's This Is Money platform. Fryer claimed to have lost more than half a million pounds after investing in a land banking scam. Four companies involved in the scam were ordered into liquidation by the High Court on public interest grounds in December 2014 following an Insolvency Service investigation.

Action Fraud was recently criticised for allowing phone calls to go unanswered after the company operating its call centres went into administration. The service, which is operated by City of London Police, was set up as a nationwide, centralised means of allowing members of the public and businesses to report financial crime.

Sheeley said that civil fraud solicitors had "nuclear weapons" that they could use on behalf of their clients. These include 'freezing' orders, which immediately stop a fraudster from spending funds; and 'search and seize' orders, which allow the victim's solicitor to enter a fraudster's property to secure evidence, he said.

"Practically, a victim's primary goal is to recover their stolen money and thereafter pursue custodial sentences, if appropriate," he said.