The introduction of the new corporate offence of “failure to prevent fraud” under section 199 of the Economic Crime and Corporate Transparency Act 2023 marks a significant shift in the regulatory landscape for organisations across the UK. Although the legislation is primarily aimed at large commercial entities, its implications for registered providers (“RPs”) in the social housing sector are substantial and warrant close attention. With the offence having come into force on 1 September 2025, housing associations and other RPs must now consider how their governance, compliance, and operational frameworks align with the new legal requirements.
Regulatory impact: a new compliance burden
At its core, the legislation imposes strict liability on organisations where an associated person – such as an employee, agent, or contractor – commits a fraud offence intended to benefit the organisation. If the organisation cannot demonstrate that it had reasonable procedures in place to prevent such conduct, it may be held criminally liable. Any organisation which meets two or more of the threshold criteria (either having more than 250 employees, or £36 million in turnover, or £18 million in assets) can commit the offence. For RPs who meet at least one of these criteria, this introduces a new layer of compliance risk.
This means that organisations meeting those criteria must have systems in place to identify and mitigate against the risk of fraud.
Organisational readiness: policies, training, and controls
Organisational readiness is now a critical priority. The Home Office has issued guidance outlining six principles that should underpin any fraud prevention framework:
- top-level commitment,
- risk assessment,
- proportionate procedures,
- due diligence,
- communication and training,
- ongoing monitoring and review.
For social housing providers, this means undertaking a comprehensive review of existing policies and controls, ensuring that fraud risks are properly assessed and mitigated across all areas of operation – from tenancy management and procurement to finance and data handling. Staff training must ensure that employees at all levels understand how to identify and report suspicious activity, and that whistleblowing mechanisms are both accessible and trusted. In many cases, this will mean creating bespoke training, rather than simply adapting existing training programmes.
Exposures to sanctions: financial and reputational risks
The consequences of non-compliance are severe. Organisations found to have failed to prevent fraud may face criminal prosecution (resulting in fines with no upper limit on the amount the court may impose) and significant reputational damage. For not-for-profit entities such as housing associations, the financial impact of such penalties could directly affect service delivery and funding. Moreover, regulatory scrutiny from bodies such as the Regulator of Social Housing may intensify, particularly where governance failures are identified. In this context, the reputational harm associated with fraud allegations can be just as damaging as the legal consequences.
Practical steps for compliance
To mitigate these risks, registered providers should take practical steps to strengthen their anti-fraud frameworks. This includes conducting a targeted fraud risk assessment, updating internal policies to reflect the new legal standards, and ensuring that contracts with third parties and agents include appropriate fraud prevention clauses. Cross-departmental collaboration is essential, with legal, compliance, HR, and IT teams working together to build a robust and responsive framework. Learning from enforcement actions in other sectors can also provide valuable insights into regulatory expectations and best practices.
Registered providers must remain agile in responding to legal developments. The regulatory landscape is evolving, and guidance from the Home Office, Crown Prosecution Service, and sector bodies such as the National Housing Federation should be monitored closely. Timely updates to internal policies and procedures will be essential to maintaining compliance and protecting organisational integrity.
Conclusion
The failure to prevent fraud offence represents a significant development in corporate accountability. For the social housing sector, it is both a legal obligation and an opportunity to reinforce a culture of integrity and transparency. By acting now to assess risks, strengthen controls, and engage leadership, registered providers can not only mitigate exposure but also enhance trust with tenants, regulators, and stakeholders.
Written by Matthew Burgess – Paralegal
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