Last month, the UK’s Financial Conduct Authority sent out a press release boasting of its success in having three fraudsters running an investment scam convicted and sentenced to jail terms totalling more than 24 years.
It caught my attention because convictions for financial crimes are painfully rare – and significant jail terms rarer still.
The government, which recently launched a new fraud strategy, says that for every 1,000 frauds there is one successful prosecution. This reflects the fact that bringing charges and getting convictions is hard, with complex cases often crossing borders.
Are many countries too soft when it comes to sentencing in such cases? Fascinating new research, drawing on the case of Finland, concludes yes.
The authors note that culprits of financial crimes are less likely to go to prison compared with other non-violent crimes (despite the fact that fraud costs about 1.5% of GDP). Only 11% of defendants are imprisoned, half or a third of the rates for non-violent drug or property crime respectively.
One reason could be that people committing these crimes tend to be more privileged than your average criminal – they’re richer, older and better educated. We call financial crime white-collar crime for a reason.
The shows that prison sentences for financial crimes work. They reduce reoffending by nearly 50% in the three years after sentencing – a big deal given that reoffending rates are high. And they have a wider deterrent effect: prison sentences reduce the probability that a fraudster’s colleagues will commit financial crimes. When it comes to tackling tackling fraud, perhaps deterrence is our best form of attack.
• Torsten Bell is chief executive of the Resolution Foundation. Read more at resolutionfoundation.org
Do you have an opinion on the issues raised in this article? If you would like to submit a letter of up to 250 words to be considered for publication, email it to us at observer.letters@observer.co.uk
