By Jeremy Scott-Joynt
Business reporter, BBC News
The UK is to offer fraudsters the chance to plea bargain as part of a planned crackdown on fraud.
If the plans work, more criminals will see the inside of a prison cell
The government's Fraud Review also suggests a specialist "financial court" to try cases, following several high-profile collapsed trials.
And it recommends national centres to set strategy and correct what it calls the "chronic under-reporting" of fraud.
Organised fraud is "second only to Class A drug trafficking as a cause of harm", it says.
The cost of fraud in the UK rose by 30% to £1bn in 2005 from a year earlier, according to a separate report in March by BDO Stoy Hayward's Fraudtrack.
However, while it highlights the heightened threat of fraud, the Attorney-General's review does not offer much extra money for the police to be able to investigate the crimes.
The BBC understands that the review had originally been expected to call for the creation of regional fraud squads.
But that was shelved after the government postponed its plans for strategic merger of police forces.
The idea of expanding plea bargaining takes the US as an example of recent success.
High-profile cases such as that of Enron's top executives have had plea bargains at their core.
Lord Goldsmith, the UK Attorney General, said that Britain did not aim simply to copy US practices, where 95% of fraud cases are settled by way of plea bargain.
And he rejected suggestions that the more mixed record of UK courts on fraud prosecutions, such as the collapse last year of the £25m Jubilee Line fraud trial, would be a disincentive for the accused to bargain.
Stiffer sentences of up to 14 years, and greater powers of confiscation and compensation for victims, meant bargains - made early on, even before charges are formally brought - could avoid long delays, he said.
"That would be good for the public, good for victims - even good for the defendants," he said.
Some four in every five cases brought by the Serious Fraud Office resulted in convictions, he said.
But the review says little about the shortage of fraud investigators, which means many crimes go unreported and undetected.
At present, there are only about 300 fraud squad officers in the UK outside of London - many of whom are often diverted to other jobs.
In contrast, the City of London Police has about 120 detectives working on fraud cases.
The review says the funding for fraud squads should be "ring-fenced", and that - unlike now - fraud should be an official priority under the UK's National Policing Plan.
It also says that the City of London Police should become a "National Lead Force", offering training and advice and - sometimes - taking over the biggest cases from other police forces around the country.
It suggests that a doubling of fraud squad officers across the country could cost about £15.5m a year.
CBI Deputy Director-General John Cridland welcomed the measures recommended the review, which he said would make prosecutions more effective.
"There is also a need for the prosecution process itself to get a lot smarter, as several recent examples of failed prosecutions show," he said.
"The problem is not just the tools, it's how they're used."
The review also recommends that the UK should provide:
- Up to eight regional "support centres", each with about 40 staff, to make sure fraud investigations get resources such as surveillance which, the review says, they sometimes lack.
- A National Fraud Strategy Authority with about 50 people - funded and staffed by both the government and private sector - to set national strategy, spread best practice and encourage prevention, building on regional initiatives such as the North East Fraud Forum.
- A National Fraud Reporting Centre, based alongside the City of London Police "National Lead Force", to analyse fraud reports and build up intelligence to help map out patterns and spot repeat offenders.
- More emphasis on confiscating the proceeds of fraud, and offering compensation to victims - perhaps through taking money from, for instance, lawyers or accountants who assist fraudsters.
The fraud review's proposals are now open for a three-month consultation.