Fraud offences - Fraud by failing to disclose information

Learning Outcomes

This article outlines fraud by failing to disclose information under the Fraud Act 2006, including:

• The statutory definition in s 3, the central elements of the offence, and how omission can itself constitute deceptive conduct.
• The nature and sources of a legal duty to disclose (statute, contract, fiduciary relationships, regulation, custom or trade usage) and how to identify such duties in problem questions.
• The critical distinction between legally enforceable disclosure duties and purely moral, ethical, or commercial expectations that fall outside the offence.
• The objective two-stage test for dishonesty after Ivey v Genting Casinos and how it is applied by judges and juries in practice.
• The meaning of intent to make a gain or cause a loss, the expansive interpretation of “gain” and “loss” in s 5, and the requirement of causation between the omission and the intended outcome.
• The relationship between actus reus and mens rea, evidential and procedural issues in proving non-disclosure and duty, and common defence arguments.
• Key differences between fraud by failing to disclose information and fraud by false representation or fraud by abuse of position, and how to classify problem facts.
• Application of these principles to SQE-style scenarios, enabling accurate issue-spotting, structured case analysis, and precise use of terminology in multiple-choice and written answers.

SQE1 Syllabus

For SQE1, you are required to understand fraud by failing to disclose information under the Fraud Act 2006, with a focus on the following syllabus points:

• the statutory basis for fraud by failing to disclose information (Fraud Act 2006, s 3)
• sources and boundaries of the legal duty to disclose information
• distinctions between legal, contractual, and fiduciary duties and moral or ethical duties
• the actus reus and mens rea components of this fraud offence, including the significance of omission
• the objective, two-stage test for dishonesty after Ivey v Genting Casinos (UK) Ltd t/a Crockfords [2017]
• interpretation of "intention to make a gain or cause a loss," including what is required for causation and the broad definition provided by s 5 Fraud Act 2006
• comparisons with fraud by false representation (s 2) and fraud by abuse of position (s 4)
• practical and procedural aspects, including how a prosecution proves a legal duty in fact, examples of duties arising under statute, contract, and fiduciary relationships, and the function of the evidential burden

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What are the three main elements that must be proved for fraud by failing to disclose information under the Fraud Act 2006?
2. Give two examples of relationships or situations where a legal duty to disclose information may arise.
3. What is the test for dishonesty in criminal law, and does it require the defendant to realise their conduct is dishonest?
4. How does fraud by failing to disclose information differ from fraud by false representation?

Introduction

Fraud by failing to disclose information is a distinct statutory offence in the Fraud Act 2006, codified in section 3. It criminalises situations in which a person dishonestly fails to reveal information to another, where they are under a legal duty to disclose it, intending by this omission to secure a gain or cause a loss. While the old law often struggled with the complex boundaries between silence, statement, and result, the current offence specifically targets deceptions by silence—an omission rather than a representation.

Understanding this offence requires precise knowledge of when the law recognises a "duty to disclose," the circumstances in which omission may amount to criminal conduct, and how modern courts interpret the requirement for dishonesty and intent. It is essential to distinguish between a legal duty (arising from law, contract, or the nature of the parties' relationship) and a mere moral or ethical expectation. The prosecution must prove every element, making the act of non-disclosure, the existence of a legal duty to disclose, dishonesty, and intent to make a gain or cause a loss key areas for exam preparation in both academic and professional contexts.

Key Term: legal duty to disclose
A legal obligation requiring a person to reveal specified information to another party, arising from statute, contract, fiduciary status, regulatory obligation, or other recognised legal source.

Key Term: dishonesty
Conduct is dishonest if, according to the defendant's knowledge or belief as to the facts, their behaviour is dishonest by the objective standards of ordinary, reasonable people (Ivey v Genting Casinos).

Key Term: intent to make a gain or cause a loss
The deliberate purpose to obtain or retain money, property, or other financial advantage, or to cause another to lose or risk losing such an advantage, whether the consequence is permanent or temporary.

Elements of Fraud by Failing to Disclose Information

To emphasise, section 3 of the Fraud Act 2006 establishes that a person is guilty of fraud if they:

• dishonestly fail to disclose to another person information which they are under a legal duty to disclose,
• intending, by failing to disclose the information, to make a gain for themselves or another, or to cause loss to another or to expose another to a risk of loss.

Accordingly, the prosecution must prove the following constituent elements:

• The defendant possessed a legal duty to disclose information to another.
• The defendant failed to disclose the relevant information.
• The failure to disclose was dishonest.
• The defendant intended by that failure to gain or cause a loss (temporarily or permanently, for themselves or another).

Each element is considered in detail below.

The Legal Duty to Disclose Information

The offence requires more than an expectation of openness; it criminalises only the silent withholding of information where a legal (not merely moral or ethical) duty exists. The Fraud Act leaves "legal duty" undefined, but the Explanatory Notes, case law, and practice provide guidance. Sources of a legal duty include:

• Statute: Legislation may require positive disclosure, such as the Companies Act 2006 obliging company directors to declare interests in proposed transactions, or welfare benefit legislation mandating claimants to inform the authorities of relevant changes in circumstances.
• Contract: Certain contracts, especially of "utmost good faith" (uberrimae fidei), such as insurance contracts, require one party to disclose all material facts that might influence the other's decision. Express or implied terms in other contracts may also create a duty—for example, an employment contract requiring disclosure of criminal convictions or disciplinary issues relevant to the role.
• Fiduciary relationships: Trustees, company directors, agents, lawyers, and certain professionals operate under fiduciary duties, obliging them to put the interests of beneficiaries or those they act for above their own and to disclose conflicts or material facts. The classic example is the duty of a trustee to inform the settlor or beneficiary of material facts affecting the trust.
• Custom or trade usage: Some commercial dealings and market customs may, in rare cases, establish a legally recognised duty.
• Regulatory obligations: Professional regulators and sector-specific rules (e.g. SRA for solicitors, FCA for financial services) may create legal disclosure obligations, breach of which may underpin a prosecution for this offence.

It is necessary to stress that a moral or ethical obligation—even if widely recognised—does not meet the legal threshold. Only a failure to disclose in breach of a legally recognised duty (typically one capable of conferring a cause of action in civil law if omitted) is caught by s 3.

The existence of the legal duty is assessed as a matter of law by the judge, not left to jury determination. If the defence can show there was no such legal duty, the prosecution will fail at the first hurdle.

Fraud by failing to disclose information is therefore an offence built on omission. The "failure" need not be absolute; partial or misleading disclosures (where material information is withheld) will suffice where there remains an unfulfilled legal duty.

• Silence in response to a direct question, remaining silent where the law imposes a duty to speak, or providing incomplete or evasive answers in a context demanding full disclosure are all capable of constituting the actus reus.

Examples of Duties to Disclose

• An applicant for a job involving trust or vulnerability who is asked, or is required under contract or regulation, to disclose all previous criminal offences but omits some prior convictions.
• An insurance applicant who fails to disclose a material fact, such as a pre-existing medical condition or earlier claim.
• A director involved in a transaction benefitting themselves or a connected party who fails to make the required statutory disclosure of their interest.

Dishonesty

The omission must be "dishonest." Dishonesty in this context is assessed by the objective standard set by the Supreme Court in Ivey v Genting Casinos [2017], and subsequent authority (applicable post-2017):

1. The fact-finder must ascertain the defendant’s actual knowledge or belief as to the facts.
2. Determine whether, on those facts, the defendant’s conduct was, by the standards of ordinary decent people, dishonest.

It is important to note, there is no requirement for the defendant to appreciate or admit their conduct was dishonest. The subjective "second limb" of the Ghosh test is no longer part of the law.

If the defendant is under a mistaken but honestly held belief in the facts (e.g., erroneously believes they have no duty to disclose, or that a fact is not material), this may be relevant to the first step. However, a mistaken belief in the law will not usually absolve criminal liability unless it negatives a required element.

As with other dishonesty-based offences, "dishonesty" is not defined in the Fraud Act 2006 itself, nor is there an exhaustive list of situations: ultimately, it is a matter for the jury (or fact-finder) to determine.

It should be noted that the statutory exceptions to dishonesty in theft law (e.g., under s 2 Theft Act 1968) do not apply to fraud offences—there is no statutory presumption in favour of the defendant for so-called "honest belief" under the Fraud Act 2006.

Intent to Make a Gain or Cause a Loss

The defendant must act with intent to:

• Make a gain for themselves or another, or
• Cause loss to another or expose another to a risk of loss.

Both gain and loss are defined broadly in s 5 of the Fraud Act 2006. "Gain" extends to keeping what one has as well as obtaining something new, and "loss" includes being deprived of something or not obtaining what one might get. The intended gain or loss can be of money or "other property," whether tangible or intangible, but does not include gaining a service.

Intent here is forward-looking—there is no requirement that a gain or loss actually results. Fraud by failing to disclose information is a conduct crime: the offence is complete as soon as the requisite intention is formed alongside the actus reus.

The defendant must have had the intent at the time of failing to disclose; later forming an intention after a non-disclosure is insufficient.

"Exposure to risk of loss" is broadly construed—intentionally putting someone in jeopardy of loss suffices, even if that loss is never realised.

Causation

An important element is causation between the omission and the intended gain or loss. The intention must be that the gain or loss will amount by virtue of the non-disclosure; it is not sufficient that the non-disclosure and intent simply coincide in time.

For example, a person who fails to disclose information they are legally obliged to supply specifically to put themselves in a better financial position, or cause a loss to the other party, will fall within the offence.

Worked Example 1.1

Scenario:
A director of a company negotiates a contract between the company and a business owned by their spouse. The director does not disclose this interest to the board, as required by law, and the contract is approved. The director intends to benefit financially from the arrangement.

Answer:
The director is under a statutory legal duty to disclose their interest in the transaction. By failing to do so, dishonestly and intending to make a gain (for themselves or their spouse), the director commits fraud by failing to disclose information.

Worked Example 1.2

Scenario:
An insurance applicant omits to mention a previous claim when completing a policy application. The applicant knows that disclosing the claim would lead to a higher premium or possible refusal of cover. The insurer issues the policy without knowledge of the earlier claim at a lower price.

Answer:
The applicant is under a contractual duty (contract of utmost good faith) to disclose all material facts relevant to the risk. The omission is dishonest by the standards of reasonable people, and the intent is to secure a gain (lower premium or insurance coverage) by non-disclosure. This satisfies all elements of fraud by failing to disclose information.

Worked Example 1.3

Scenario:
A claimant is required by law to notify the relevant benefits authority of changes in personal circumstances affecting welfare benefit entitlement. The claimant obtains a job but fails to notify the authority of this change, intending to continue receiving benefits.

Answer:
The claimant is subject to a statutory duty to disclose any change in circumstances relevant to their entitlement. By knowingly and dishonestly failing to do so, intending to make a gain (continued improper benefits), the claimant commits fraud by failing to disclose information.

Worked Example 1.4

Scenario:
A solicitor, acting as trustee for a client, discovers a conflict of interest in a transaction involving trust property but fails to reveal this conflict to the beneficiaries. The solicitor later obtains a financial benefit from the transaction.

Answer:
As a professional trustee, the solicitor owes a fiduciary duty to act in the beneficiaries’ best interests. Failure to disclose a conflict breaches a legal duty under trust law, and if done dishonestly with intent to make a gain or cause the beneficiaries to suffer a loss, constitutes an offence under s 3.

Exam Warning

For application, it is important to differentiate fraud by failing to disclose information from both fraud by false representation and from civil causes of action for misrepresentation/non-disclosure. Fraud by failing to disclose information strictly requires proof of a pre-existing legal duty to speak: not every omission is criminal.

Distinguishing Fraud by Failing to Disclose Information from Other Fraud Offences

There are three methods of committing fraud under the Fraud Act 2006:

• Fraud by false representation (s 2): Involves positively making a false or misleading statement as to fact, law, or belief, including by silence if that silence is itself a representation (for example, where a statement is made and the defendant fails to correct a misunderstanding created by their earlier words or conduct).
• Fraud by failing to disclose information (s 3): Centres on the breach of a legal duty to reveal information in specified circumstances, with criminal liability arising from omission, not commission of a statement.
• Fraud by abuse of position (s 4): Applies where someone in a position of trust dishonestly abuses that position to secure a gain or cause a loss.

The distinction between s 2 (false representation) and s 3 (failing to disclose) is important: s 2 deals with what is said; s 3 with what is left unsaid in the face of a duty. Not every misleading silence falls under s 3—absent a legally enforceable duty, the omission is not criminal.

Summary Table

• Fraud by failing to disclose information cannot be proved where there is no duty to disclose, even if the omission is in bad faith; nor can it be proved without actual dishonesty and intention to gain or cause loss.

Revision Tip

In application problems, always start by asking: does a legal duty arise from law, contract, relationship or regulation, requiring disclosure of a particular fact? If not, s 3 cannot be proven, even if the conduct is unethical. If uncertain about the duty, consider whether a civil cause of action (e.g. for breach of contract or statutory breach) would lie—if not, probably there is no "legal duty" for these purposes.

Key Point Checklist

This article has covered the following key knowledge points:

• Fraud by failing to disclose information, under s 3 Fraud Act 2006, requires the existence of a legal duty to disclose, a dishonest omission, and intent to make a gain or cause a loss.
• Legal obligations to disclose may arise from statute, contract (express or implied), fiduciary principles, regulatory rules, or custom/trade usage recognised by law.
• Mere moral or ethical duties are insufficient; the duty must be juridical.
• Omission may be absolute or partial—dishonest partial disclosures may still fulfil the actus reus.
• The objective test for dishonesty from Ivey v Genting applies: no requirement for the defendant to subjectively appreciate dishonesty.
• "Intent to make a gain or cause a loss" is broadly defined and does not require gain or loss to actually occur, only an intention connected to the omission.
• Fraud by failing to disclose information is distinct from fraud by false representation and fraud by abuse of position, both in concept and legal requirements.

Key Terms and Concepts

• legal duty to disclose
• dishonesty
• intent to make a gain or cause a loss