Wales DRS delay could expose scheme to £300m annual fraud risk

The warning comes amid ongoing uncertainty around the Welsh scheme, after its government reopened applications for a Deposit Management Organisation (DMO) less than 18 months before scheme launch.

Industry figures have warned that a lack of alignment between Wales and the wider UK system could create significant loopholes for fraudsters, particularly through cross-border redemption activity between England and Wales.

Andy Bagnall, Director General of the BSDA, commented: “Without the swift appointment of a scheme administrator in Wales by the new government, there is a real risk that the Welsh Deposit Return Scheme will not be operational when the scheme goes live in the rest of the UK from October 2027.

“Industry analysis suggests that having no scheme in Wales could expose the wider UK scheme to fraud risks estimated at up to £300 million per year, creating loopholes that criminals could exploit across borders and between different regulatory frameworks.”

Concerns have been raised that drinks purchased in Wales without a deposit applied could potentially be redeemed in England where a 20p deposit would be payable, creating an arbitrage opportunity at scale.

‘A successful DRS depends on interoperability’

Sources across the sector have also raised concerns that even if Wales launches a DRS on schedule, divergence through the inclusion of glass containers could create a secondary fraud risk.

In this scenario, containers purchased in England outside of scope could potentially be redeemed in Wales if systems are not fully interoperable.

The issue is expected to increase pressure on producers and scheme operators to introduce more stringent anti-fraud measures, potentially driving up producer fees to cover the additional risk exposure.

Some producers could reconsider supplying the Welsh market entirely if compliance costs become disproportionate.

Bagnall added: “A successful Deposit Return Scheme depends on interoperability. Industry is investing more than £1 billion to help create a system for plastic bottles and metal cans that can operate seamlessly across the Four Nations, supporting the creation of 4,000 new jobs, with the soft drinks sector contributing the majority of that investment.

“Divergence in Wales through the inclusion of glass in its scheme risks undermining that alignment, increasing operational complexity, driving up costs for producers and retailers, and creating uncertainty for consumers and small businesses.”

Uncertainty around Senedd elections

The latest concerns emerge against the backdrop of continued uncertainty over the structure and governance of the Welsh scheme.

Before the Senedd closed ahead of elections, the Welsh Government reopened applications for the scheme’s DMO after an earlier process failed to appoint an operator.

Industry sources indicated that Exchange For Change – the appointed DMO for England, Scotland and Northern Ireland – was the sole applicant during the first application round but was not selected.

Exchange for Change has announced its intention to submit a fresh application following the reopening of the Welsh process.

Plaid Cymru, who won 43 out of 96 seats in the 2026 elections, has supported the introduction of a Welsh DRS but has previously advocated for a phased rollout.

The party has backed the inclusion of plastic and metal containers initially, with glass to follow only when operationally feasible and with protections for smaller businesses facing additional costs.