The recent decision in R v Preddy [1996] 3 WLR 255 has caused much alarm, especially among prosecutors and lenders.

In Preddy, the House of Lords allowed the appeal of those alleged to have committed mortgage frauds on the grounds that the alleged fraudsters had not gained 'property belonging to another'.The reason was that where a payment was made between two banks telegraphically, electronically or by cheque, no identifiable property passed from the payor to the payee.

Accordingly, the payee could not be guilty of dishonestly obtaining or attempting to obtain property belonging to someone else within the meaning of s 15(1) of the Theft Act 1968.In a report on 15 October entitled 'Offences of dishonesty, money transfers' (No 243), the Law Commission proposed a new offence of obtaining a money transfer by deception.

Because of the difficulties in charging offences of handling after the decision in Preddy, the Law Commission has also recommended a new offence of retaining credit from dishonest sources.A Law Commission press release dated 14 October stated: 'This offence would require a wrongful credit being made to an account held by the defendant or in respect of which he has any right or interest, his knowledge or belief that the credit was wrongful, and a dishonest failure on his part to take such steps as are reasonable in the circumstances to secure the credit was cancelled.

A credit would be regarded as wrongful to the extent that it derives from theft, blackmail, stolen goods or our new offence of obtaining a transfer by deception.'On 15 October, the home secretary promised in written parliamentary answer No 120 that legislation would be introduced at the earliest possible opportunity.

It would not be retrospective.The immediate effect of Preddy has been to make it difficult to prosecute charges of obtaining money dishonestly by any means other than cash payment.

R v Graham (HK) [1996] The Times, 28 October, recorded seven successful appeals against conviction.

In all the cases the appellant had been convicted by a jury.

Their Lordships hoped that appro priate legislation would be enacted with all due speed.The ripples from the discovery of this loophole in the law will spread not only to mortgage fraud but to commercial fraud in general.

The Serious Fraud Office's opinion, quoted in the Financial Times on 16 October, is that: 'Amending the existing legislation is a sticking plaster solution.

The only long term solution would be to give a general offence of fraud based on dishonesty.'The idea of a general offence of fraud has been canvassed before.

Existing substantive offences do not cover the whole field of fraudulent conduct that ought to be the subject of criminal sanction.

The prosecutor may have evidence within the criteria of the Code for Crown Prosecutors, but he or she may find either that the conduct is not caught at all by existing statute or that the appropriate substantive offences may not adequately reflect the nature or gravity of the fraud.Two or more people together may be charged with the common law offence of conspiracy to defraud.

But it is illogical that two or more people may be guilty of a criminal offence by virtue of having agreed to do something that either of them would be legally allowed to do alone.

The Law Commission has been considering the question of a general offence of fraud for some years.Scottish law retains a common law offence of fraud, where the offence is that some form of deception is dishonestly practised on the victim.

But not all frauds involve a deception, and deception was never an essential ingredient either of conspiracy to defraud or of the old common law offence of cheating.

The role of regulators such as the Securities and Investments Board and the Law Society must be examined when reform is considered.

Much commercial misconduct, it is often argued by politicians, could or should be controlled by such organisations.Piecemeal amendment of the law means that courts will continue to be troubled by mortgage fraud cases.

But it is important that the inherent difficulties of prosecuting fraud cases are not forgotten or shelved again.

All mortgage fraud is expensive, particularly for the profession.The honest members of our profession pay for mortgage fraud through increased insurance premiums and contributions to the compensation fund.

Each reported case damages the profession's image, whether or not there is a conviction.Solicitors involved in police investigations, however innocently, suffer stress and financial loss.

To be the target of an investigation, even if no charges are brought, can ruin a solicitor's career.

Even one wrongful conviction is unacceptable.This area of the law has often been considered since the Roskill report on fraud trials was published in 1986.

Recent high profile cases such as Blue Arrow, Barlow Clowes and Maxwell cogently illustrate that early comprehensive reform would be in the best interests of potential defendants, victims, the taxpayer and the solicitors' profession.