The govt guaranteed the Bounce Back Loans which meant that the banks did not carry out the usual checks for loans. They have more or less given up on chasing the fraudsters.
And it wasn't just fraudsters who misused the loans. Accountants report clients borrowing £50k and using the money to buy an expensive car. Others used the loans for personal and not business purposes.
The following is an extract from an article was published in in Compliance magazine, the member publication of the International Compliance Association, on 24th January 2021.
"A report from the National Audit Office (NAO), published on 3 December 2021, found that the Government failed to put adequate measures in place to prevent fraudsters stealing billions of pounds through its BBL scheme. In fact, it is said that up to £17bn out of over £47bn credit provided through COVID-19 related loans will not be repaid. Further reports estimate as much as £4.9bn of the credit is thought to have been taken by fraudsters.
The fundamental purpose of the BBL Scheme was to provide businesses with capital to get them through the COVID-19 lockdown. Introduced in March 2020 as the UK went into the first lockdown, it was quickly ushered through. This was understandable as the economy was vulnerable and urgent measures were being conjured up to prevent collapse.
There were concerns over the flaws in the approval service, but these were overshadowed by an ‘act now and worry later’ policy. Applications for funding amounts between £2,000 to £50,000 were invited, and the government website provided application guidance suggesting that a short online application form would need to be completed, and self-declarations to confirm eligibility would be acceptable. For those looking for some easy, quick cash, this was perhaps akin to a car being left unlocked on the drive with the keys in the ignition.
The ease of access to funding and the lowering of approval scrutiny meant that there was always a risk. Fraud and overstated (or under-declared) applications slipped through the net. Huge numbers of applications were received within the first six weeks, and 860,000 loans were approved during this period.
In order to get the money out to applicants as quickly as possible, scrutiny of applications was lowered, with only certain conditions still being required to meet eligibility.
Since the loans were approved and those doing the back-office legwork have had time to catch a breath, the Cabinet Office has identified detailed examples of different types of fraud:
Hard fraud – large-scale fraud, often committed by organised criminal gangs. Examples include the impersonation of a legitimate business or person, submitting multiple fraudulent applications with different lenders, and using money mules to accept the loans and then filing for bankruptcy.
Soft fraud – where an organisation exaggerated an aspect of its business to acquire a loan, normally by way of inflating annual turnover figures. "
I doubt that any govt, with a different range of MPs would have allowed the above to happen.