Protecting public funds: what the Public Authorities (Fraud, Error and Recovery) Act 2025 means for your organisation

Protecting public funds: what the Public Authorities (Fraud, Error and Recovery) Act 2025 means for your organisation

New provisions in the Public Authorities (Fraud, Error and Recovery) Act 2025 place a renewed emphasis on the prevention of fraud against public authorities and on recovering money paid by public authorities as a result of fraud or error. For organisations that interact with public bodies, including suppliers, contractors and grant recipients, the change has direct implications for governance, financial controls and risk management.

What has changed

The Act sets out the statutory framework for preventing fraud against public authorities and for recovering funds that have been mispaid due to fraud or error. It formalises the expectations placed on duty holders to detect, prevent and report fraud risks and to cooperate with public authorities in recovery processes. It is relevant to procurement, contracts, grants and other payments where public funds are involved.

Who is affected

Any organisation that receives public funds, provides services to a public body or is engaged in contracts with public authorities should review their controls. This includes private sector suppliers, charities, higher and further education institutions, local authorities and other organisations that may be at risk of fraud or erroneous payments linked to public funds.

Key risks to manage

• Fraud in procurement, invoicing and payments
• Errors resulting in overpayments or misallocation of public funds
• Delays in recovery action and potential reputational damage

What organisations should do now

• Update anti-fraud policy and ensure it covers prevention, detection and reporting of fraud involving public funds
• Strengthen procurement controls, including supplier verification, contract governance and segregation of duties
• Implement or enhance payment controls, audit trails and payment approvals
• Establish robust processes for identifying and reporting suspected fraud promptly to authorities
• Conduct a fraud risk assessment focused on areas with public funding and high risk of error
• Provide training for staff and suppliers on fraud awareness and reporting procedures

Practical actions and ongoing governance

Document processes, retain evidence of due diligence and ensure senior management oversight. Where appropriate, engage independent assurance to test controls and verify compliance with the new expectations of the Act.

Synergos and achieving compliance

Synergos Consultancy supports organisations in aligning governance and risk management with regulatory expectations. Our services help design robust anti-fraud controls, procurement governance and management system integration. See ISO 9001 and ISO 27001 to understand how a well governed management system supports compliance and resilience. ISO 9001 ISO 27001.

Why this matters for business

Public funds are at risk from fraud and errors. Strengthening controls reduces loss, protects public value and supports sustainable service delivery. Timely action now lowers the risk of enforcement steps and costly recovery actions in future contracts.

In summary, the Act requires organisations handling public funds to elevate fraud prevention and recovery readiness as a core governance and financial control priority.

This article focuses on the single most impactful change for businesses: the formalised expectations for preventing fraud against public authorities and recovering mispaid funds, with clear actions for strengthening controls, governance and reporting.