Companies House chief warns on fraud

The efforts of Companies House (CH) to tackle fraud should be based on “strengthening the current model rather than radically changing company law”, its chief executive has told CSW, to ensure that anti-fraud work doesn’t weaken transparency in business information or create additional burdens on business.

By Matt.Ross

19 Jun 2013

“We’re not going to rewrite the Companies Act,” Tim Moss said in an interview published today. “So it’s about saying, what more can we do? How can we make better use of the powers we’ve got? Can we put more resources into these things? And, very importantly, how can we work better with others who also operate in this space?” Instead of “building in more up-front checks”, Moss added, CH should “take a more coordinated approach” to tackling fraud when it occurs by working more closely with partners such as HMRC, the police and the Insolvency Service.

Moss’s comments follow the publication last November of a report by the Fraud Advisory Panel, in which the panel made a number of recommendations regarding the work of CH. These included: “Introduce new minimum due diligence checks at Companies House on all new directors to existing companies against the Disqualified Directors Register”, and “Introduce a fit and proper persons test for all new company directors to confirm their identity and demonstrate their good character.”

In response, Moss warned that “there’s a policy agenda around quick, easy, low-burden registration, so you can set up a company quickly and then do business and support the economy.” The question, he said, is “how you balance the ease of doing business with minimising the risk of fraud” – and a system which included more up-front checks “would place considerably higher burdens on those supplying the data or the costs of running that system, and would slow down how quickly that information can be out in the public domain.”

Moss explained some of the problems with the specific recommendations set out by the panel (see interview), and argued that the best solutions revolve around better coordination in enforcement work and the introduction of new, digital systems that minimise the potential for fraud. Anti-fraud specialists and deregulation campaigners, he suggested, can both “focus very hard on one bit, but what you need to do is take a step back and say: ‘What’s the whole purpose of the register, and how do you balance those competing agendas?’ If you go too far one way or the other, you’re going to have problems.”

CH has just submitted a strategy document to its business department minister Michael Fallon, Moss added, and “the direction we’re suggesting is building on and strengthening what we’ve got, rather than bringing in radical change and saying we should move to up-front checks – because I don’t think that works.”

See also CSW's full interview with Tim Moss 

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