Like fraud by false representation, fraud by failure to disclose information is a specific offence defined in Section 3 of the Fraud Act. This offence applies when a person is under a legal duty to disclose information but intentionally fails to do so in order to make a financial gain or cause, or risk causing, a financial loss to another.
The Legal Definition – Section 3, Fraud Act 2006
“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.”
Key Elements of the Offence
To secure a conviction for this type of fraud, the following elements must be established:
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Existence of a Legal Duty to Disclose The individual must be under a legal (not just moral or ethical) obligation to disclose information. This could arise through:
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Contractual obligations
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Statutory requirements
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Professional codes of conduct (e.g., in fiduciary roles)
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Relationships of trust, such as between financial advisors and clients
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Dishonesty The failure to disclose must be dishonest. The courts apply the objective test from Ivey v Genting Casinos (UK) Ltd [2017] to determine dishonesty: whether the conduct would be regarded as dishonest by ordinary reasonable people.
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Intention to Gain or Cause Loss The individual must intend to:
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Gain financially (for themselves or others), or
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Cause loss or risk of loss to another
Importantly, the gain or loss need not materialise—the intent alone is sufficient.
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Sign Up Here: A mortgage applicant who fails to disclose existing debts or employment status on a loan application, where full disclosure is a contractual and legal requirement. A financial advisor who neglects to inform a client of commissions received from recommending certain products, breaching their fiduciary duty to be transparent. A company director who omits key information about conflicts of interests during a procurement process, with the intent of favouring a personal business connection.Examples of Fraud by Failure to Disclose
Penalties
Fraud by failure to disclose is an indictable offence, punishable by:
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Up to 10 years’ imprisonment,
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An unlimited fine, or
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Both.
Final Thoughts
This provision underlines the importance of transparency where a legal duty exists. Individuals in positions of trust or responsibility must be vigilant in ensuring they meet their disclosure obligations. Failure to do so, even passively or by omission, can amount to serious criminal conduct under UK law.
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