Fraud Act 2006 Summary

Prior to the Fraud Act 2006

The Fraud Act came into force on the 15^th January 2007 and replaced the eight deception offences contained within the Theft Acts 1968 and 1978. Its principal offences apply in England and Wales and Northern Ireland, where corresponding deception offences were also repealed. The former offences remain relevant to conduct occurring before commencement. Prior to the introduction of the Fraud Act 2006 the former law had been the subject of criticism^[1]. This criticism had been recognised by the Law Commission who produced a report on fraud, drawing attention to some of the difficulties contained within the law at the time^[2]. One of the major problems that had been raised within the report was that there were too many offences as opposed to only one offence. The report suggested that a single crime of fraud should be introduced which would simplify the law^[3]. The previous law was considered perplexing in places, containing overlaps which meant that prosecutors were confused as to which offence they should proceed with. In addition, the over particularisation of offences risked a defendant being faced with “the wrong charge or too many charges”^[4].

The courts were faced with difficulty relating to interpretation such as whether a representation could be implied^[5], whether a cheque guaranteed to be honoured could nevertheless involve a false representation of authority to use it^[6] and whether a machine could be the subject of deception^[7]. In conjunction with this issue there was also the problem that prosecutors would often be tripped up over such aspects of the offence like the form of the transaction: obtaining cash under Section 15, obtaining a money transfer under Section 15A, or procuring the execution of a cheque as a valuable security under Section 20(2)^[8].

The aim of the Fraud Act 2006

Some offences contained within the Theft Act 1968 were so difficult for the courts to apply that parliamentary assistance was required and the Theft Act 1978 was brought in to replace section 16(2)(a) of the 1968 Act. This however did little more than exacerbate the issues of overlapping and over particularised offences that had also been present in the previous Act. The notable case of Preddy^[9] exposed a gap in the offence of obtaining property by deception: a bank transfer created a new credit in the recipient’s account rather than transferring the payer’s property. The Theft (Amendment) Act 1996 addressed this through the offence of obtaining a money transfer by deception, but wider reform remained necessary. If the law was to keep up with evolving technology and the changes and in turn provide an efficient solution to the act of fraud, then a longer term method was required. This long term method came in the form of the Fraud Act 2006 whose objective was to modernise and clarify the law in order to keep up with the changes in technology which related to the way that fraud was committed^[10].

Changes made by the Fraud Act 2006

Section 1 of the Act introduced a new offence of fraud which could be committed in three ways: by way of false representation (Section 2), failing to disclose information (Section 3) and abuse of position (Section 4). Each requires dishonesty and an intention to make a gain for oneself or another, cause loss to another, or expose another to a risk of loss. Under Section 5, gain and loss concern money or other property, may be temporary or permanent, and include keeping property or not receiving property one might otherwise receive. No actual gain or loss is required.

The offence of fraud carries a maximum of 10 years’ imprisonment on conviction on indictment, a fine, or both. The Act also created two ancillary offences. The first is possession or control of articles for use in fraud under Section 6, an either way offence carrying a maximum of five years’ imprisonment on indictment. It requires an intention that the article be used in fraud, but, unlike section 25 of the Theft Act 1968, does not require possession away from home. The second is making, adapting, supplying or offering to supply articles for use in fraud under Section 7, with knowledge of their design or adaptation for fraud, or an intention that they be used to commit or assist fraud. Its maximum sentence on indictment is 10 years’ imprisonment. Under Section 8, articles include electronic programs and data.

There are a number of prominent differences between the old and the new law. Under the old law the focal point was the Defendant’s conduct which deceived the victim and caused the result required by the particular offence. Under Section 2 of the new act there is no requirement to prove that the victim or another person believed the representation or acted on it. This means that the Defendant may be considered liable even if the victim is aware that the statement made is false, provided the representation was dishonest, the defendant knew it was or might be untrue or misleading, and intended a gain, loss or risk of loss as specified in Section 2. A representation can concern fact, law or a person’s state of mind, can be express or implied, and can be submitted to an automated system or device. Another main difference between the old and the new law is that the old deception offences required the deception to bring about the result specified by the particular offence. However, in the new act under the offence of fraud by false representation it is not a requirement that the defendant obtain anything.

Despite its attempts to rectify the failings of the previous law in this area, the Fraud Act 2006 has still been subject to some criticism. Section 3 of the Fraud Act 2006 covers the less controversial form of fraud whereby the defendant is liable if they dishonestly fail to disclose information which they are under a legal duty to disclose, intending thereby to make a gain, cause a loss or expose another to a risk of loss. During the Bill’s passage, Lord Lyell drew attention to the lack of further guidance as to what defines a legal duty that in turn would trigger liability^[11]. The Law Commission explained that a legal duty to disclose may arise from statute, contract, trade custom or a fiduciary relationship^[12]. This has been confirmed by the Attorney General who stated: “The Government believe that it would be undesirable to create this disparity between the criminal and the civil law; it should not be criminal to withhold information which you are entitled to withhold under civil law”^[13].

The advantages of the Fraud Act are that it allows jurors to more easily understand complex aspects of the law, reduces over particularisation of offences and the risk of duplicating charges in the indictment. Whilst these are notable advantages of the fraud Act, concerns about the scope of a general fraud offence are illustrated by Professor Green’s discussion of the concept:

“If fraud really were to encompass not just stealing by deceit, but also deceptive and non-deceptive breaches of trust, conflicts of interest, non-disclosure of material facts, exploitation, taking unfair advantage, non-performance of contractual obligations, and misuse of corporate assets, it would be virtually impossible to distinguish between different offenses in terms of their nature and seriousness, and even to know whether and when one had committed a crime^[14].”

Despite this assertion, one major advantage that the Fraud Act has made way for is the clearer expression of large scale criminal acts under one charge.

Section 4 covers a position in which the defendant is expected to safeguard, or not act against, another person’s financial interests. The dishonest abuse may be an act or an omission, with the required intention to gain, cause loss or risk loss. A formal fiduciary duty is not essential.

The Act also created the offence of participating in a fraudulent business outside the company fraudulent-trading provisions (Section 9), and obtaining services dishonestly (Section 11). Section 11 requires services to be obtained by a dishonest act without full payment, knowing that payment is or might be required and intending that it will not be made in full. Unlike Section 1 fraud, services must actually be obtained. The maximum sentences on indictment are 10 years under Section 9 and five years under Section 11.

Under Section 12, a company officer who consents to or connives in a company’s offence under this Act may also be liable. Section 13 prevents reliance on self-incrimination to avoid answering questions or complying with orders in specified civil property proceedings, but protects the resulting statements or admissions from use against the person or, subject to its conditions, their spouse or civil partner in proceedings for fraud or related offences. The common law offence of conspiracy to defraud was not abolished.

2026 update

Dishonesty test changed: The fraud offences under sections 2, 3, and 4 all require proof of dishonesty. The test for dishonesty has changed significantly since this summary was written. In Ivey v Genting Casinos [2017] UKSC 67, the Supreme Court stated that the two-stage R v Ghosh test should no longer be used. The Court of Appeal confirmed the application of the Ivey test in criminal cases in R v Barton and Booth [2020] EWCA Crim 575. The test applies an objective standard to the facts as the defendant believed them to be: the fact-finding tribunal determines what the defendant’s actual knowledge or belief as to the facts was, then decides whether the conduct was dishonest by the standards of ordinary decent people. There is no longer a requirement to prove the defendant knew their conduct was dishonest by those standards.

Corporate criminal liability for fraud: The Economic Crime and Corporate Transparency Act 2023 introduced a new offence of failure to prevent fraud (section 199), in force from 1 September 2025. A large body corporate or partnership may be liable where an associated person commits a listed fraud offence intending to benefit the organisation or certain clients to whom services are provided on its behalf. The listed offences include sections 1, 9 and 11 of the Fraud Act 2006. Actual benefit need not result. There is a defence of reasonable fraud prevention procedures, or that it was unreasonable to expect any such procedures. The organisation is not liable under the client-benefit limb where it was, or was intended to be, a victim.

For this offence, a large organisation ordinarily meets at least two of three thresholds in the preceding financial year: turnover exceeding £36 million, assets exceeding £18 million, and more than 250 employees. Section 202 applies group-wide tests to parent undertakings, and section 199 also covers certain subsidiary liability. Associated persons include employees, agents, subsidiaries and others performing services for or on behalf of the organisation. Conviction on indictment carries an unlimited fine.

Separately, section 250 of the Crime and Policing Act 2026, in force from 29 June 2026, provides that a body corporate or partnership also commits an offence committed by its senior manager acting within the actual or apparent scope of their authority. Subject to its territorial conditions, this extends beyond economic crimes and replaces the earlier rule in sections 196–198 of the 2023 Act. It is not restricted to large organisations and is distinct from failure to prevent fraud.

Bibliography

Cases

Davies v Flackett [1973] R.T.R. 8

MPC v Charles [1977] A.C. 177

R v Preddy [1996] AC 815

Ray v Sempers [1974] A.C. 370

Legislation

The Theft Act 1968 Section 15, 15A, 16, 20, 25

The Theft Act 1978

The Fraud Act 2006 Section 1, 2, 3, 4, 6

Books

Green S. P, Lying, Cheating and Stealing: A Moral Theory of White Collar Crime (OUP, 2006, 1^st edition)

Journals

Withey C, The Fraud Act 2006 – some early observations and comparisons with the former law (2007) J. Crim. L. 2007, 71(3)

Ormerod D, The Fraud Act 2006 – criminalising lying? (2007) Crim. L.R. Mar

Reports

Great Britain: Ministry of Justice Post -legislative Assessment of the Fraud Act 2006. Memorandum to the Justice Select Committee (Cmd 8372, 2012). Accessed via: https://books.google.co.uk/books?id=TmzCA7yl_EYC&printsec=frontcover&dq=fraud+act+2006&hl=en&sa=X&ved=0ahUKEwjq94uqgPPKAhXCXRQKHUkgALcQ6AEIJzAB#v=onepage&q=fraud%20act%202006&f=falseAccessed 10^th February 2016.

Hansard HL, Col 1426 (July 19, 2005)

Hansard HL, Col 1427 (July 19, 2005)

HC Research Paper 06/31

Law Commission, Fraud, Law Com, Report No 276, Cm 5560 (2002)

^[1] C Withey, “The Fraud Act 2006 – some early observations and comparisons with the former law” (2007) J. Crim. L. 2007, 71(3), 220-23.

^[2] Law Commission, Fraud, Law Com, Report No 276, Cm 5560 (2002).

^[3] Ibid para 1.6 (3).

^[4] Ibid 3.20

^[5] Ray v Sempers [1974] A.C.370.

^[6] MPC v Charles [1977] A.C.177.

^[7] Davies v Flackett [1973] R.T.R.8.

^[8] D Ormerod, “The Fraud Act 2006 – criminalising lying?” (2007) Crim. L.R. Mar, 193-219.

^[9] R v Preddy [1996] AC 815.

^[10] Great Britain: Ministry of Justice Post -legislative Assessment of the Fraud Act 2006. Memorandum to the Justice Select Committee (Cmd 8372, 2012) para 3

^[11] Hansard HL, Col 1427 (July 19, 2005) (Lord Lyell of Markyate)

^[12] HC Research Paper 06/31 pp12-13

^[13] Hansard HL, Col 1426 (July 19, 2005). On the distinct question of belief in a claim of right under the then applicable dishonesty test, see Law Commission, Fraud, Report No 276 (2002), para 7.69.

^[14] S.P. Green, Lying, Cheating and Stealing: A Moral Theory of White Collar Crime (Oxford University Press, 2006, 1^st edition) pg 151.

Last updated: 11 November 2026