The number of fraud cases being investigated by City of London police has increased by 63% over the last year to more than 10,000, involving losses of well over £1bn, according to Steve Head, chief of the force.
Head warns that the UK is about to be hit by a further wave of fraud as the credit crunch bites. He expects a growing number of Ponzi schemes, like that run by Bernie Madoff, to come to light. There has also been a rise in "boiler room fraud", where investors are conned by smooth-talking salesmen into buying worthless or dubious shares, contrary to expectations that share-buying would fall in the recession.
Head says: "We have seen a rise in the sophistication of this fraud and in the brutality of the crooks when people try to dig themselves out of a hole.
"We have seen people driven to suicide because they have lost everything."
Manuals confiscated from boiler room fraudsters show how investors are carefully selected to receive harassing phonecalls. Among other recommendations, salesmen are told to avoid talking to women as they "ask more questions than men".
The fight against fraud has been hampered by investigators' reluctance to co-operate and share information. This is being addressed with the launch of the National Fraud Reporting Centre and the National Fraud Intelligence Bureau in the next six months.
Links between the various bodies working on fraud are set to be formalised by the agreement of a secret memoranda of understanding.