Bounce Back Loans: The First Big Fraud Story of 2021

At the start of a new year, there are always articles and columns about the coming twelve months in Governance, Risk and Compliance, mixing educated guesses about the future with analysis of emerging issues. We never really know what a new year will bring, but one big talking point in fraud this year has made itself clear in the first week of 2021.

The British Business Bank is concerned that “thousands” of companies “wrongly claimed emergency Covid loans”. Reports emerged last week that PwC have been hired to analyse transactions including the £43.5 billion in loans that have been claimed under the Bounce Back Loan Scheme. In November the bank disclosed that they had already detected over £1 billion in fraudulent requests – and while that money has been dispensed by banks, it will fall to taxpayers to reimburse them in cases where borrowers fail to pay back the money.

The Bounce Back Loan Scheme made loans of up to £50,000 available to small businesses, and over 1.43 million companies have made use of them. The multiple recent national lockdowns have seen the deadline for applying for the loans extended through to 31st of March this year, and businesses who had previously borrowed less than the maximum amount have the option of “topping up” their pre-existing loan. All of which means that the issue of those using the scheme fraudulently will extend well into 2021 and it could be some time before all of the money is accounted for.

I think that’s going to be a key theme across many different aspects of Financial Services and Banking this year – issues that we may initially have thought would be contained to the first half of 2020 are going to extend well into this year as the pandemic continues and the economic after-effects of the virus and the lockdowns continue to be felt. There is hope on the horizon as mass vaccination gets underway, but the impact on our sector may not have the quick, clear ending some had hoped for.