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IAI SP6 study materials
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IAI SP6: Legal and Regulatory Framework for Fraud

IAI SP6 · Work through your exam, one topic at a time.

All guide sections

Legal and Regulatory Framework for Fraud

This domain tests the criminal offences, the civil and contractual consequences, and the regulatory and data-protection obligations that surround an insurance fraud case. You must be able to match a scenario to the right legal route.

Criminal offences

  • Fraud Act 2006: section 2 (false representation), section 3 (failing to disclose), section 4 (abuse of position), section 6 (possession of articles for use in fraud), section 7 (making or supplying such articles) and section 11 (obtaining services dishonestly).
  • Common law conspiracy to defraud remains available; Theft Act 1968 section 15 is legacy but still appears in older authorities.
  • Criminal standard: beyond reasonable doubt.

Civil and contractual consequences

  • A fraudulent claim forfeits the whole claim, including the genuine part (the fraudulent device principle).
  • Insurance Act 2015: business policyholders owe a duty of fair presentation; deliberate or reckless breach allows the insurer to avoid and retain premium.
  • Consumer Insurance (Disclosure and Representations) Act 2012: consumers owe a duty of reasonable care, with proportionate remedies.
  • Criminal Justice and Courts Act 2015 section 57: fundamental dishonesty allows dismissal of the claim and disapplies qualified one-way costs shifting.

Regulatory and data

  • Proceeds of Crime Act 2002 reporting obligations; Data Protection Act 2018 and UK GDPR for lawful data sharing (CUE, Insurance Fraud Register).
  • FCA Principles, ICOBS, SM&CR and Consumer Duty; industry bodies IFB, IFED and Cheatline.

Worked example

A motor claimant adds £2,500 of pre-existing damage. Analysis: potentially section 2 Fraud Act 2006; the insurer may decline the entire claim under the fraudulent device principle; section 57 may justify dismissal with costs; a police or IFED referral may follow. The insurer must still handle the customer fairly and record its reasoning.

Traps

  • Assuming a policy is automatically void - outcome depends on statute and contract.
  • Confusing civil and criminal standards.
  • Forgetting section 57 and the costs consequences.