More than a third of UK businesses have no systems in place to help detect fraud and 47 percent don't invest in training staff on how to spot fraud, according to the findings of a Fraud & Asset Recovery Survey, undertaken by Midlands law firm Challinors. 

"Overall our survey confirmed that over half of UK businesses are worried about business or commercial fraud," comments Arun Chauhan, joint head of Challinors Fraud & Asset Recovery Department. "It is surprising therefore that more than 40 percent have no systems or trained, dedicated staff, in place to help detect fraud, especially in the current economic climate, and particularly as the Survey also revealed that 75 percent of businesses taking part believe fraud is having a direct effect on their business."  

The findings of the Survey were revealed at an event last week to launch Challinors' new Fraud & Asset Recovery Department, at which Mark Kenkre, who heads the team alongside Arun, said: "Businesses are increasingly aware of the potential losses they can suffer from fraudulent activities which costs the UK economy £14 billion a year according to the Government's National Fraud Strategic Authority - but often believe they won't be targeted. 

"We often get involved after the fraud has been perpetrated as businesses start to investigate 'black holes' in the balance sheets and seek to investigate the source. But businesses need to be more proactive to minimise the risks of fraud. Coping with the consequences of even a small fraud can be extremely time consuming and in the current climate, businesses cannot afford to lose the focus of managers to these matters when their capacity is already stretched." 

60 percent of businesses surveyed believe fraud is on the rise on both a national and international scale, whilst closer to Challinors, a quarter of businesses believe that fraudulent activity in Birmingham and the Midlands has increased within the last six months.  The Survey also revealed that businesses believe complacent internal procedures, the Banks and Government, are to blame for their increased threat from fraud. 

"The knock-on effect of fraud is also a concern for business," says Arun. "According to the Survey, over 97 percent of businesses believe the increase in fraud will lead to a rise in insurance premiums, followed by financial losses for the business (90%), increased end user prices (82%) and overall a loss of commercial confidence (77%). 

"The financial sector and on-line businesses are deemed at greatest risk from fraud, followed by the property and construction sector, retail, music and entertainment, and hospitality," says Arun. 

Only 40 percent of the Survey's participants know that Birmingham has its own dedicated Fraud & Asset Recovery experts. "With businesses needing to be ever more conscious of the professional spend, Birmingham represents an economically efficient alternative, without forgoing the expertise once believed only to exist in London," says Arun. "This is one of the reasons behind Challinors formalising its team in this specialist area. Based in the heart of Birmingham's business quarter, the new department draws together lawyers from across our commercial and corporate legal departments."   

Last year, Challinors was appointed to the Treasury Solicitor's Department Panel based on its ability to deliver litigation and investigation services to the Treasury Solicitor's Department and other central government bodies. The Department provides legal services to more than 180 government departments and other publicly funded bodies throughout England and Wales.  

Challinors Fraud & Asset Recovery event, the first in a series throughout the year, also looked at Mortgage Fraud, an area Challinors believes requires particular focus: "We expect there to be increased growth and exposure for financial institutions in the unprecedented economic climate," says Mark Kenkre, "Mortgage fraud is a prime example of potential increased exposure to fraud and the likely problems of fraud for mortgage lenders, on occasion caused by both the surveyor and broker involved in a transaction." 

Guest speaker was John Randall QC, a Barrister at Birmingham's St Philips Chambers, rated as the 'leading silk' in the Midlands and described in the Chambers Directory as a 'phenomenally bright mind', 'a formidable advocate' and 'the cream of the crop'. 

Conducted in April 2009, Challinors' Fraud & Asset Recovery Survey involved representatives from UK operating in a diversity of industry sectors including professional services, manufacturing, banking and financial services with annual turnover ranging from £100k to £50m+. 

Challinors has offices in Birmingham, West Bromwich and Nottingham. The firm has 23 partners and over 100 fee earners, and is ranked as one of the top legal firms in the West Midlands, being Number 1 in the Chambers UK Directory in a number of categories.