The warning call came from the anti-fraud leader at the trade body UK Finance during a session of the business, energy and industrial strategy (BEIS) committee, in which fraudulent company registrations were being examined.

Nick Van Benschoten, the director of international illicit finance at UK Finance, said: “Companies House is supposed to be a key part of the information infrastructure underpinning the business environment.

“At the moment it is a dysfunctional part, and other people cannot compensate for that.

“The government needs to get it right first time, and then we can help and build on that. But at the moment I’m afraid it’s not an efficient feature.”

Anti-fraud managers from HSBC and RBS-owner NatWest joined Mr Van Benschoten in raising the issue, The Guardian reports.

Donald Toon, the head of risk threat mitigation at NatWest, added: “We have a real issue here because we are obliged to verify accounts, and we look at Companies House data as part of that verification process.

“And the obligation is then on us to tell Companies House whether there is a difference between what we are told and what is on their database.”

Mr Troon said NatWest spends an approximate £500 million every year on fraud prevention.

Graham Barrow, a money-laundering expert who produces The Dark Money Files podcast, commented: “We have a very significant problem of shell companies, or ‘burner’ companies, who are doing short-term fraudulent activity and then disappearing. Some people find that their houses are being stolen from under their noses.”

He added: “You have to provide verification of your identity to borrow a library book. You don’t have to do that to create a company which could cause tens of thousands of pounds’ worth of damage to our economy.”

Martin Swain, a director at Companies House, responded: “I would love to see in three or four years’ time that we are not getting the negative press coverage we get, that we are a ‘facilitator of fraud’. That is not where we want to be as an agency – we want to be a preventer of fraud.”