Before 2006, fraud-related offences were scattered across the Theft Act 1968 and the Theft Act 1978. The law was messy, with multiple overlapping deception offences that were hard to apply to modern crimes like internet fraud. The Fraud Act 2006 swept all that away and replaced it with a single, clear framework based on three ways of committing fraud. If you understand these three routes, you can tackle virtually any fraud scenario in the exam.
The Fraud Act 2006 received Royal Assent on 8 November 2006 and came into force on 15 January 2007. It abolished the old deception offences under s.15 and s.16 of the Theft Act 1968 (obtaining property by deception and obtaining a pecuniary advantage by deception) and the offences under the Theft Act 1978. The Act also created new offences like obtaining services dishonestly (s.11) and possessing articles for use in fraud (s.6 and s.7).
A person is guilty of fraud if he is in breach of any of the sections listed below (which sections are sections 2, 3 and 4). A person found guilty of fraud is liable on conviction on indictment to imprisonment for a term not exceeding 10 years, or a fine, or both. A person guilty of fraud on summary conviction is liable to imprisonment for a term not exceeding 12 months, or a fine, or both.
Fraud carries a maximum of 10 years on indictment. That tells you how seriously the law takes it. For the SQE, you do not need to memorise the summary conviction limit, but knowing the 10-year maximum helps you distinguish fraud from lesser offences like obtaining services dishonestly (which has a lower maximum).
Section 1 makes it clear: you commit fraud if you breach s.2, s.3, or s.4. These are not separate offences with different penalties — they are three different ways of committing the single offence of fraud. All three share the same mens rea requirements: dishonesty and an intention to make a gain or cause a loss (or risk of loss). The difference lies in the actus reus — what the defendant actually did.
| Feature | s.2 False Representation | s.3 Failing to Disclose | s.4 Abuse of Position |
|---|---|---|---|
| Actus reus | Making a false representation | Failing to disclose information when under a legal duty to do so | Abusing a position of trust where you are expected to safeguard another’s financial interests |
| Key element | Representation must be false, and D knows or might know it is false | Must have a legal duty to disclose | Must occupy a position where you are expected to protect another’s financial interests |
| Includes omissions? | No — must be an active representation | Yes — the offence is itself an omission | Yes — abuse can be by omission |
| Common examples | Lying on a form, using a stolen card, fake online listings | Insurance non-disclosure, hiding information in contracts | Employee theft, trustee misappropriation, solicitor dishonesty |
| Key case | R v Venna (cashpoint machine) | R v Gelsthorpe (insurance) | R v Jackson (solicitor) |
| Can be to a machine? | Yes — s.2(5) | No — requires a person to whom disclosure is owed | No — requires a person whose interests are affected |
Regardless of which section the fraud is charged under, the prosecution must prove two mens rea elements. First, the defendant must have acted dishonestly. This is assessed using the Ghosh test: was the conduct dishonest by the ordinary standards of reasonable and honest people, and did the defendant realise that? Second, the defendant must have intended to make a gain for themselves or another, or to cause loss to another or to expose another to a risk of loss.
Dishonesty is the first mental element the prosecution must prove for all three types of fraud. The current test comes from R v Ivey [2017] UKSC 41, which replaced the two-stage Ghosh test. Under Ivey, the jury must determine whether the defendant’s conduct was dishonest by the ordinary standards of reasonable and honest people. There is no separate subjective limb — if the conduct was objectively dishonest, that is enough, even if the defendant did not personally realise it.
The SQE will expect you to know that Ivey replaced Ghosh. Under the old Ghosh test, the jury had to ask two questions: was the conduct dishonest by ordinary standards, and did the defendant realise it was dishonest? Ivey removed the second question. Now it is purely objective: was the conduct dishonest by the standards of ordinary decent people? Make sure you cite Ivey, not Ghosh.
The second mens rea element is that the defendant must intend to make a gain for themselves or another person, or intend to cause loss to another person, or intend to expose another person to a risk of loss. It does not matter whether the gain or loss actually occurs — the intention is enough. The gain or loss must be in relation to money or other property.
(1) References to gain and loss are to be read as references to gain and loss in money or other property. (2) Gain includes a gain by keeping what one has, as well as a gain by getting what one has not. (3) Loss includes a loss by not getting what one might get, as well as a loss by parting with what one has.
Section 5 is broader than you might think. "Gain" is not just getting something new — it includes keeping what you already have. So if you lie to avoid repaying a debt, that is a gain by keeping what you have. "Loss" is similarly wide — it includes not getting something you might otherwise have received, not just losing something you already own. A risk of loss is also sufficient, so you do not need to show that actual loss occurred.
In an SQE question, always identify specifically what the intended gain or loss is. The examiner wants to see that you can apply s.5. For example, if someone lies on an insurance claim, the gain is the insurance payout (money) and the loss falls on the insurer. If someone uses a stolen credit card, the gain is the goods received and the loss falls on the cardholder or the bank.
(1) A person is in breach of this section if he— (a) dishonestly makes a false representation, and (b) intends, by making the representation— (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss. (2) A representation is false if— (a) it is untrue or misleading, and (b) the person making it knows that it is, or might be, untrue or misleading.
A representation is any statement as to fact or law. It can be express (spoken or written words) or implied by conduct (R v Silverman [1894] 2 QB 733). So nodding your head, handing over a fake banknote, or putting goods on a shop counter with a stolen card can all amount to a representation. The key is that it conveys something that is not true.
A representation must relate to fact or law. It cannot be a mere statement of opinion, intention, or future conduct. In R v Rai [2000] EWCA Crim 200, the defendant promised to do work but had no intention of doing so. The Court of Appeal held that a promise to do something in the future is not a representation of fact — it is a statement of intention. This means you cannot commit fraud by false representation simply by breaking a promise, unless the promise itself was dishonestly made with the hidden intention of not performing.
Be careful with the distinction between opinion and fact. Saying "this car is in great condition" when you know it has a hidden fault is a representation of fact (about the car’s condition) and can be fraudulent. But saying "I think this car is worth £5,000" is an opinion and, by itself, cannot found a fraud charge. The SQE often tests whether something is a representation of fact or merely an opinion.
Under s.2(2), a representation is false if it is untrue or misleading, and the person making it knows that it is, or might be, untrue or misleading. So you do not need to know for certain that the representation is false — it is enough that you know it might be. This is a lower threshold than certainty and makes it easier for the prosecution to prove the mens rea.
Section 2(5) specifically provides that a representation can be made to a person or to a machine. This was included to cover modern fraud involving computers, cashpoints, and online systems. In R v Venna [1976] QB 421 (decided under the old law but still relevant), the defendant used a stolen card at a cashpoint. The court held that operating the machine with a stolen card amounted to making a representation (that he was authorised to use the card). This principle now has statutory backing under s.2(5).
Patel used stolen credit card details to make online purchases. The representations were made to the retailer’s automated online payment system. The Court of Appeal confirmed that representations made to a machine via a computer system fall within the scope of fraud by false representation. This is critical for modern commercial fraud involving the internet.
In R v F, the defendant made false statements on an insurance claim form, inflating the value of items stolen in a burglary. The court held that submitting a false insurance claim constitutes fraud by false representation. The representation was the false statements on the claim form, and the intended gain was the inflated insurance payout. This is a classic example of the offence in action.
The most frequently tested scenarios for fraud by false representation are: fake insurance claims, using stolen credit/debit cards (online or in person), submitting false CVs or qualifications, providing false information on loan or mortgage applications, and online auction fraud where goods are not as described. Know these well.
A person is in breach of this section if he— (a) dishonestly fails to disclose to another person information which he is under a legal duty to disclose, and (b) intends, by failing to disclose the information— (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss.
The critical element of s.3 is the legal duty to disclose. Unlike s.2 where the defendant actively says or does something false, s.3 is about what the defendant does not say. But there must be a legal duty to disclose the information — mere silence is not enough. You are not generally required to volunteer information just because it would be helpful to the other party. The duty must come from a recognised legal source.
There are four main sources of a legal duty to disclose. First, statute: some legislation expressly imposes a duty to disclose particular information (for example, insurance contracts under the Insurance Act 2015, though consumer insurance duties have been modified). Second, common law fiduciary relationships: trustees, company directors, and agents owe duties of disclosure to their beneficiaries, shareholders, and principals. Third, contractual duties: some contracts impose express or implied duties to disclose material information. Fourth, special relationships recognised at common law: for example, the duty of utmost good faith (uberrimae fidei) in insurance contracts.
Gelsthorpe failed to disclose his previous motoring convictions when applying for motor insurance. He obtained cheaper premiums as a result. The court held that there was a duty to disclose material facts under the principle of utmost good faith in insurance contracts. His failure to disclose, combined with dishonesty and the intention to gain (cheaper insurance), amounted to fraud. This remains the leading example of s.3 fraud.
There is no general duty of disclosure in English law. If you sell a car privately and know the gearbox is about to fail, you are not generally required to tell the buyer unless there is a specific legal duty (for example, if you made a statement that would be misleading without the additional information). The SQE often tests whether a legal duty exists in a given scenario.
A person is in breach of this section if he— (a) occupies a position in which he is expected to safeguard, or not to act against, the financial interests of another person, (b) dishonestly abuses that position, and (c) intends, by means of the abuse of that position— (i) to make a gain for himself or another, or (ii) to cause loss to another or to expose another to a risk of loss.
The concept of "position" under s.4 is deliberately broad. It covers any situation where you are expected to protect or not act against another person’s financial interests. This includes employment relationships (especially where you handle money or finances), fiduciary relationships (trustees, directors, agents), professional relationships (solicitors, accountants, financial advisors), and family relationships where one person manages another’s finances. The key question is whether, looking at the relationship objectively, the person was expected to safeguard the other’s financial interests.
Abuse of position can be through positive action or through omission. If you are expected to safeguard someone’s finances and you simply do nothing while their money is stolen, that can be an abuse by omission. Equally, actively diverting funds to your own account is an abuse by positive act. The abuse does not need to be the sole cause of the loss — it is enough that the defendant abused their position intending to cause loss or make a gain.
Jackson was a solicitor who dishonestly transferred £250,000 from his client account to his own account. He occupied a position (solicitor) in which he was expected to safeguard his clients’ financial interests. By transferring the money, he abused that position. The Court of Appeal upheld his conviction for fraud by abuse of position. This is the leading authority on the solicitor-client context.
Skingsley was a bank employee who opened accounts in fictitious names and transferred money into them. She occupied a position (bank employee) where she was expected to safeguard the bank’s financial interests and those of its customers. Her actions constituted a clear abuse of that position. The Court of Appeal confirmed that the offence of abuse of position was well-suited to employee fraud scenarios.
Ingram was a trustee who dishonestly used trust funds for his own purposes. As a trustee, he occupied a fiduciary position and was expected to safeguard the financial interests of the beneficiaries. His use of trust money for personal gain was a clear abuse of that position. This case illustrates how fiduciary relationships fall squarely within s.4.
If a person in a position of trust makes a false representation, they could technically be charged under both s.2 and s.4. In practice, the prosecution will charge under s.4 if the defendant’s position is central to the fraud. For example, a solicitor who forges a client’s signature on a cheque abuses their position (s.4) and also makes a false representation (s.2). The position of trust makes s.4 the more appropriate charge.
A person is guilty of an offence if he obtains services for himself or another by a dishonest act, and he obtains them without any payment in full or without having made any agreement to pay. A person obtaining services for a third party is guilty of an offence if the services are obtained without any payment in full or without any agreement to pay being made by or on behalf of the third party.
Section 11 is a separate, lesser offence. Unlike fraud (s.1), it does not require a false representation, a failure to disclose, or an abuse of position. All that is required is that the defendant dishonestly obtains services without paying or agreeing to pay for them. The maximum sentence is lower than fraud. Typical examples include skipping a taxi fare, sneaking into a cinema, or using someone else’s WiFi without permission.
For s.11, the services must actually be obtained. If you attempt to obtain services but fail, you have not committed the s.11 offence (though you might have attempted fraud under the Criminal Attempts Act 1981). This distinguishes s.11 from fraud, where the attempt itself can be sufficient if the elements of s.2, s.3, or s.4 are met.
Under s.6, a person is guilty if they have in their possession or under their control any article for use in the course of or in connection with any fraud. The article must be something that the defendant intends to use, or intends to enable another person to use, to commit fraud. Examples include stolen credit cards, counterfeit documents, card-reading equipment, and fake ID templates. The defendant must know or have reason to believe that the article is for use in fraud.
Section 7 goes further: it is an offence to make, adapt, supply, or offer to supply any article knowing or believing that it is designed or adapted for use in the course of or in connection with fraud, or intending it to be used to commit or assist in fraud. This targets the suppliers of fraud equipment — the people who make fake cards, produce phishing templates, or supply card skimmers.
Before the Fraud Act 2006, the main deception offences were s.15 Theft Act 1968 (obtaining property by deception) and s.16 Theft Act 1968 (obtaining a pecuniary advantage by deception). The Theft Act 1978 also created offences of obtaining services by deception and evading liability by deception. These offences all required proof of deception, which was defined as any deception by words or conduct as to fact or as to law, including a deception as to the present intentions of the person using the deception or any other person.
The Fraud Act 2006 made several important changes. First, the concept of "deception" was replaced with the broader concepts of false representation, failure to disclose, and abuse of position. Second, the requirement that the victim be deceived was removed — under s.2, a representation to a machine is sufficient. Third, the old requirement that property or a pecuniary advantage actually be obtained was relaxed — under the Fraud Act, it is the intention to make a gain or cause loss that matters, not whether it actually occurs. Fourth, the new framework is simpler and more flexible, making it easier to prosecute modern fraud.
| Feature | Theft Act 1968/1978 | Fraud Act 2006 |
|---|---|---|
| Key concept | Deception | False representation / failure to disclose / abuse of position |
| Must the victim be deceived? | Yes — deception required | No — representations to machines count under s.2 |
| Must gain/loss actually occur? | Yes — property/advantage must be obtained | No — intention to gain/cause loss is sufficient |
| Coverage | Multiple separate offences | Single offence with three routes |
| Modern fraud | Poorly suited to online and machine fraud | Designed to cover online and automated transactions |
| Maximum sentence | Varied by offence (up to 10 years) | 10 years for all fraud under s.1 |
The deception offences under s.15 and s.16 Theft Act 1968 and the offences under the Theft Act 1978 are all abolished. For the SQE, if a question involves facts that occurred before 15 January 2007, the old law applies. For facts after that date, use the Fraud Act 2006. In practice, the SQE will almost always test the current law.