• Saturday, July 20, 2024


Suspected fraud on Covid loans climbs in value

The government has paid out £8.5 bn to lenders under state guarantees so far, while £18.7 bn has been fully repaid by borrowers

FCA has found that Nailesh Teraiya knew that the documents were false and misleading and that they were used to support “reclaims” of tax which had never actually been paid.(Representational image: iStock)

By: easterneye.biz Staff

THE value of suspected fraud flagged by lenders across emergency state-backed loans granted to struggling businesses in the Covid-19 pandemic has increased by seven per cent to £1.8 billion, government figures showed on Tuesday (28).

Banks handed out a total of £77 bn of state-backed funds to support companies hit by pandemic lockdowns, but the prevalence of scams has attracted criticism.

The fraud estimate as of September 30 this year compares with a previous estimate of £1.69 bn at the end of June.

The government also published data on loans stripped of state guarantees for the first time, confirming a Reuters’ exclusive earlier this month based on data obtained under a Freedom of Information request.

The removals put banks on the hook for any unpaid borrowings on those loans – which would otherwise be guaranteed to be between 80-100 per cent of the value by the government – and shields taxpayers from some losses.

Guarantees had been removed from 10,786 loans worth a combined £979 million as of October 11, the government said.

In total, the government has paid out £8.5 bn to lenders under state guarantees so far, while £18.7 bn has been fully repaid by borrowers.

A further £27.5 bn of outstanding balances are being repaid on schedule, while £2.2 bn is in arrears, £670m in default, and £730m claimed by lenders under guarantees but not yet settled.

The government also disclosed for the first time that £18.8 bn worth of the overall balance on the loan schemes had been reduced, mainly through partial repayments by borrowers.


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