The Serious Fraud Office (SFO) should be dismantled and replaced by an organization with a stronger focus on preventing economic crime, suggested a free-market think tank.

The Institute of Economic Affairs claimed the SFO had suffered numerous high-profile failures, including ethical breaches and incompetence, and said its current approach was deeply flawed.

A report from the institute, authored by three experts on economic crime, recommended the creation of a new body tasked with both fraud prevention and the prosecutory powers currently held by the SFO.

Established in 1988, the SFO is responsible for investigating and prosecuting serious or complex fraud, bribery, and corruption.

The institute reported that fraud is now the most prevalent crime in the UK, yet fraud convictions decreased from 12,378 in 2012 to 3,455 in 2022.

Researchers criticized the SFO for focusing on complex, high-profile cases at the expense of other critical areas, such as crime prevention and support for small and medium-sized businesses increasingly vulnerable to fraud.

They further argued that the criminal justice system was not equipped to handle the intricate and technical nature of serious fraud cases, resulting in costly delays and, frequently, failed prosecutions.

The proposed new agency should utilize alternative justice mechanisms more broadly, such as deferred prosecution agreements and imposing larger fines, said the institute. It should also have greater authority to establish standards and impose regulatory penalties.

David Shepherd, an economic crime researcher and co-author of the report, stated: “The SFO is constrained by its focus on criminal justice and courts, which are not suitable for these cases. A reformed agency with a new identity and expanded regulatory powers would better serve the public.”

The institute accused the SFO of several shortcomings, including failing to disclose potentially exculpatory evidence, mishandling documents, using unlawful search warrants, conducting inadequate legal analyses, and making unfounded allegations. In one instance, the SFO allegedly forged a letter.

Convictions of former Unaoil executives were overturned due to the SFO failing to disclose key material about communications between its former director, Lisa Osofsky, and a Unaoil adviser.

Since 2015, the SFO has raised £1.7 billion through deferred prosecutions, where companies are charged with a criminal offense but proceedings are suspended after agreeing to pay a fine. Critics argue this method can be unfair and insufficient as a deterrent.

Nick Ephgrave, the new director since September, stated he is focused on expediting case resolutions.

An SFO spokesperson highlighted: “Since 2020, we have returned over £1 billion to UK taxpayers from penalties, successfully prosecuted more than 20 individuals and companies, and secured the UK’s largest-ever corporate sentence.”

In 2022, Glencore was ordered to pay a record £281 million fine following bribery charges brought by the SFO. Ephgrave has announced plans to bolster the office’s preventative capabilities.