- Tens of thousands of people are having companies set up in their name by fraudsters who then use the details to take out loans or swindle consumers
- This growing type of fraud, part of a wider criminal epidemic sweeping the country, is being met with no resistance from Companies House
- Despite promises by the Government to beef up its powers, Companies House is powerless to check the veracity of information supplied by anyone forming a new company
Fraud is now reaching shocking levels in the UK. The amount stolen through such scams surged by 30 per cent in the first half of this year to £754million.
For months, the MoS has campaigned for urgent action to ‘Nail the Scammers’, including co-ordinated action by the police, Government and banks to tackle the crimewave head on.
Someone is able to register a business at Companies House in minutes for just £12 – without having to provide proof of identification. There is also little to stop fraudsters inputting any information they like – for example, details about the alleged directors of the business and their addresses.
The register is littered with false and fraudulent information. A quick search reveals that registered company directors include Adolf Tooth Fairy Hitler and Stalin Stalin. Companies House simply registers whatever information is provided – it has no legal power to check or question it.
In fact, Martin Swain, director of strategy, policy and external communications at Companies House, recently admitted: ‘Even though, sometimes, we know that the information is incorrect or potentially fraudulent, the registrar is legally required to register it.’
Helena Wood is an associate fellow at the Centre for Financial Crime and Security Studies at the Royal United Services Institute in London. She says: ‘The Companies House register is not fit for purpose and we need action to fix it.
How fraudsters operate their scams
Once a fraudster has set up a company in someone else’s name, a wealth of opportunity for criminal activity suddenly opens up. They may use the new company to apply for loans or bursaries they have no intention of repaying. The fraudsters remain anonymous, so they will not be on the hook for the loans.
Thankfully, victims will not be asked to pay the loans back once they show that their information was fraudulently used without their knowledge. But if someone appears to be associated with a bogus company, it can compromise the reputation of any genuine business of which they are a director.