RSA Insurance has urged the industry to prepare for the new Failure to Prevent Fraud (FTPF) offence, which comes into effect on September 1, 2025. The offence, introduced under the Economic Crime and Corporate Transparency Act 2023 (ECCTA), requires organisations to have effective fraud prevention procedures in place. If an employee, agent or supplier commits fraud for the benefit of the organisation, the organisation itself could be prosecuted. The ECCTA applies to companies and partnerships meeting at least two of three thresholds: more than 250 employees, turnover above £36 million, or assets exceeding £18 million.
Government estimates suggest that nearly 25,000 businesses may fall within scope of the legislation, marking a significant expansion of corporate liability. RSA has called on insurers and brokers to help clients understand and respond to the requirements.
Adele Sumner, head of Counter Fraud Strategy and Financial Crime at RSA, said that the strategic objective of the legislation is to reduce fraud by embedding stronger controls. She explained that one way to lower the risk is to ensure organisations have reasonable procedures in place to prevent fraud. Reviewing and strengthening anti-fraud controls is critical, and the industry should work together to inform and equip clients on how best to address the issue.
RSA is providing businesses with guidance, tools and resources to assess risk and implement or strengthen fraud prevention procedures. The insurer is also working with brokers to help clients adapt.
Sumner added that RSA is supporting brokers and customers in understanding the legislation during its initial months to prevent the rules from having a potentially significant impact on businesses. She noted that fraud affects all levels of the economy, which is why the legislation covers a wide range of businesses. Up to 11,000 mid-sized organisations with between 250 and 500 employees may now fall within the scope of the regulations. She also highlighted the risk for smaller firms, many of which may not have strong internal fraud controls and could face criminal liability even if they were unaware that fraud had occurred.
Insurance implications
Brokers and insurers are anticipating increased demand for commercial crime and directors’ and officers’ (D&O) liability coverage, as businesses seek to manage potential exposure under the new offence. Firms without robust internal controls may face higher premiums or restrictions on coverage.
Industry sources noted that insurers are reviewing policy wordings to clarify the treatment of FTPF-related claims, particularly where companies can demonstrate proactive fraud prevention measures. Some insurers are also offering advisory services and risk assessment tools to help clients reduce liability.
Market observers expect that the legislation will make fraud prevention a standard component of risk management strategies for medium and large enterprises, with insurers playing a central role in supporting compliance and governance measures.
