The Fraud Act 2006, which from today abolishes the deception offences in the Theft Acts 1968 and 1978 and the Theft (Amendment) Act 1996, will simplify prosecution but contains few incentives on businesses to report suspected fraud.

The Fraud Act 2006 creates wide-reaching preliminary offences of possessing or making equipment to commit frauds, introduces a new offence of fraudulent trading by a sole trader and increases the maximum sentence for fraudulent trading under s 458 of the Companies Act to 10 years. It also replaces "obtaining services by deception" with "obtaining services dishonestly".

?By and large it is a good law,? Edmund Lawson, a specialist in fraud at Cloth Fair Chambers says. ?Compared to a lot of recent criminal legislation, it is well-considered and well-drafted. The explanatory notes are a positive help, it's a good precedent to follow to have a proper explanation of the pros and cons.?

However Lawson maintains that the Act does little to alter the previous legislation: ?I'm not convinced it is going to make a whole heap of difference, at least in cases where someone has dishonestly taken money", he said. ?The main difference with the previous Act is that the criminality lies in the dishonesty with a view to making a gain. In that sense, it simplifies things.?

According to the last set of Criminal Prosecution Service ?Fraud and Forgery? case statistics, of the 42 Areas in England and Wales, 564 defendants (85.2 per cent) were convicted and 98 defendants (14.8 per cent) were ?unsuccessful?, in that they were acquitted after a trial or the case was discontinued.

Andrew Durant, Head of the Fraud Investigations Team at Navigant Consulting, believes that even though the Act will make it easier to prosecute fraudsters in the long-run, companies still need to spot the fraud, investigate it themselves and then report to the police.

He said: ?One of the biggest hurdles to a successful prosecution is the reluctance of companies to report the fraud in the first place. This attitude has changed over the last decade but still not enough companies are taking this step which acts as a strong deterrent to potential fraudsters - the fear of being prosecuted will make people think twice.?

Durant's comments follow on from a BDO Stoy Hayward survey earlier this year, which showed that businesses in the UK only reported 15 per cent of fraud to the police in 2006 despite a 40 per cent rise in the number of cases to ?1.37bn. The 'FraudTrack' analysis concluded that reported fraud has increased by 314 per cent since 2003.