Fraud is no longer simply an operational issue; it is a strategic governance and organisational resilience challenge for housing providers. Recent developments have highlighted increasing threats from AI-enabled fraud, tenancy fraud, procurement manipulation and identity fraud. Legislative change means boards and senior leadership teams are expected to demonstrate greater oversight of fraud risk, governance and organisational controls.
Fraud is becoming more sophisticated…
Artificial Intelligence (AI) is enabling fraudsters to create convincing fake documents, clone voices, impersonate senior executives and automate large-scale phishing attacks. Traditional fraud controls designed to detect manual or low-level fraud are increasingly being tested by these new methods.
However, whilst technology is changing the methods used, many frauds still exploit familiar weaknesses: inadequate oversight, weak or overridden procurement controls, poor segregation of duties and ineffective monitoring of third-party relationships.
For housing providers, areas of continuing exposure include:
- Tenancy and occupancy fraud, including unlawful subletting and false applications.
- Repairs and maintenance contractor fraud.
- Procurement and supplier manipulation.
- Grant and retrofit funding assurance.
- Identity fraud during customer onboarding.
- Insider fraud involving employees or trusted contractors.
Recent government initiatives to use data matching between local authorities and short-term letting platforms to identify unlawful subletting demonstrate the increasing use of intelligence-led approaches to detecting fraud. Providers should expect greater scrutiny of tenancy management and eligibility controls in the coming years.
Governance matters more than ever
One of the clearest themes emerging from recent regulatory investigations is that significant fraud rarely results from a single control failure. Instead, it often develops where governance arrangements fail to provide sufficient challenge, oversight or transparency. Boards are increasingly asking not simply “Could fraud happen?” but “How confident are we that we would identify it before significant losses occur?”
This shift is driving greater demand for proactive fraud risk assessments, data analytics, continuous controls monitoring and independent assurance over fraud prevention arrangements.
ECCTA – Why Recent Legislative Changes Matter for Housing Providers
The Economic Crime and Corporate Transparency Act 2023 (ECCTA), together with the subsequent Crime and Policing Act 2026, represents one of the most significant reforms to corporate criminal liability in decades. Collectively, these reforms have broadened the circumstances in which an organisation may be held criminally liable for the actions of senior managers acting within the actual or apparent scope of their authority. Under the Crime and Policing Act 2026, effective from 29 June 2026, the senior manager attribution regime has been extended well beyond specified economic crime offences, substantially broadening the range of criminal offences to which it may apply and increasing organisations’ potential exposure to corporate criminal liability.
Alongside the changes to senior manager liability, ECCTA also introduces the new corporate offence of Failure to Prevent Fraud. Large organisations may be criminally liable where an associated person commits certain fraud offences for the benefit of the organisation, unless the organisation can demonstrate that it had reasonable fraud prevention procedures in place. Although the offence applies only to organisations meeting the statutory size thresholds, its principles are now widely regarded as good governance practice across the wider housing sector.
The effect of these legislative changes is that boards should view fraud, regulatory compliance and governance as interconnected organisational risks rather than separate issues. This aligns closely with the Regulator of Social Housing’s expectations for governance, financial viability, value for money and effective risk management, making fraud prevention and strong governance integral to organisational assurance.
What could this mean in practice?
For example, where a senior manager allows building safety compliance to be overlooked, deliberately approves false information in relation to grant funding, or circumvents procurement rules during a major repairs programme, the consequences may extend beyond regulatory scrutiny, potentially increasing the organisation's exposure to criminal liability.
For registered providers, many of the areas presenting the greatest fraud risk also overlap with wider regulatory responsibilities, including:
- Procurement fraud involving repairs, maintenance or major works contracts.
- Bribery or corruption associated with contractor procurement or tendering exercises.
- Health and safety offences, for example where governance failures contribute to breaches of building safety or landlord compliance obligations.
- Data protection offences arising from the misuse or unlawful disclosure of tenant information.
- Environmental offences, including failures linked to waste disposal, asbestos management or contractor activities.
- False accounting or fraud relating to grant claims, retrofit funding or financial reporting.
- Modern slavery offences where organisations fail to identify exploitation risks within their supply chains.
- Computer misuse or cyber-enabled offences, particularly where weak governance enables unauthorised access or misuse of organisational systems.
- Consumer standards failures where inaccurate reporting or deliberate concealment of information could amount to criminal conduct.
The legislation is not intended to criminalise organisations for isolated mistakes. However, it places greater emphasis on demonstrating that appropriate governance, oversight and preventative controls are in place. For boards, the question is no longer simply “Could this happen?” but “Can we demonstrate that we took reasonable steps to prevent it?”
This reinforces the importance of:
- Clearly defined fraud governance arrangements.
- Robust procurement and contract management.
- Effective due diligence over contractors and third parties.
- Strong whistleblowing and speak-up arrangements.
- Regular fraud risk assessments.
- Meaningful management information and board reporting.
- Independent assurance over the effectiveness of key controls.
Looking ahead
Fraud prevention is now a core component of organisational resilience. As fraud threats continue to evolve, housing providers should ensure their counter-fraud arrangements evolve in line with emerging risks. Strong governance, effective fraud controls and independent assurance not only reduce financial loss but also support wider regulatory objectives, including consumer standards, value for money, financial resilience and maintaining tenant trust.
Questions boards should be asking
- Do we know where our highest fraud risks sit?
- Could we demonstrate that we have reasonable fraud prevention arrangements in place?
- Are we receiving sufficient information to identify emerging fraud risks?
- How much reliance do we place on contractors and third parties, and how effectively are they monitored?
- Have we reviewed whether our governance arrangements remain fit for purpose in light of recent legislative developments?
- Would we be able to evidence that we had taken reasonable steps to prevent misconduct if challenged by a regulator or enforcement agency?
The question is no longer whether fraud risks exist, but whether organisations have sufficient visibility and assurance to identify and respond to them before they become significant governance issues.
For housing providers, the challenge is demonstrating to regulators, tenants and stakeholders that fraud risks are being actively managed through effective governance, proportionate controls and independent assurance.
How Menzies Can Help
Whether you are reviewing your fraud arrangements following recent legislative changes, responding to a suspected fraud, strengthening your governance framework or seeking independent assurance over your existing controls, Menzies’ Forensic & Valuation Services team can provide practical, proportionate support tailored to the housing sector. Our services include:
- Counter fraud strategies
- Failure to Prevent Fraud Readiness Assessments
- Tailored counter-fraud work programmes
- ECCTA / Corporate Liability Readiness Reviews
- Board Fraud Governance Reviews and Training
- Repairs, maintenance and contractor fraud reviews
- Grant and retrofit funding assurance
- Data analytics and fraud detection
- Governance reviews
- Whistleblowing and allegation management
- Internal investigations
- Forensic accounting
- Asset tracing and recovery
If you would like to discuss any of the issues raised in this article or explore how your organisation can strengthen its fraud resilience, governance framework, investigation capability or wider forensic accounting arrangements, please contact your usual Menzies adviser or a member of our Forensic & Valuation Services team.
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