Businesses have lost faith in the ability of the criminal justice system to deal with fraud, BDO Stoy Hayward's annual FraudTrack survey claims.

The research found that while 87% of companies in the financial services sector reported cases of non-VAT fraud, the total for all other sectors of the economy stood at just 13%.

According to the survey, there was a fall of 46% in the total value of non-VAT fraud cases reported in 2007 compared to the previous year, slipping from £913m in 2006 to £496m.

BDO claims this is not because instances of fraud are falling but because victims feel there is little point in reporting such activity to the police.

"Fraud is actually spreading like the flu," said Simon Bevan, the report's author and national head of BDO Stoy Hayward's fraud services team. "Until you are hit by it you don't always know how bad it can be. Less fraud is going through the courts and many fraudsters may be feeling invisible. That is certainly not the case."

The organisation also warned that with an economic slowdown likely to hit the financial services and property sectors, those industries would be ripe for fraudulent activity over the coming year.