UK’s New Fraud Strategy Splits Experts On Effectiveness

May 5, 2023
Criminal crackdowns, new resources and new powers are among key proposals to tackle the UK’s fraud problem, but concerns remain that the government is not taking enough action.

Criminal crackdowns, new resources, and new powers are among key proposals to tackle the UK’s fraud problem, but concerns remain that the government is not taking enough action.

The UK’s new fraud strategy sets out its plans to crackdown on what has become an increasing challenge for policymakers, regulators and the payments industry alike.

Statistics from Action Fraud, the UK’s fraud reporting centre, show that some £2.35bn reported losses took place in 2020 and 2021.

Meanwhile, KPMG’s fraud barometer found that the total value of alleged fraud over £100k that reached UK courts in 2022 was £1.12bn, which is an increase of 151 percent compared with £444.7m in 2021.

The UK government’s Home Office ministry has now set a target to reduce fraud by 10 percent to below 2019 levels by 2025.

To deliver on this target, the government has committed to an array of measures, such as establishing a new national fraud squad, which will have more than 400 new posts and make fraud a priority for the police.

Action Fraud is also to be overhauled with a “state-of-the-art” system for victims to report fraud and cyber crimes to the police.

In addition, more fraudsters will face jail time, with this being achieved through better investigation and prosecution processes for fraud and digital offences.

On the international front, the UK’s intelligence community will lead a new global partnership to pursue fraudsters wherever they are in the world.

“The publication of the UK Fraud Strategy is a welcome display of leadership from the government,” Tony Craddock, director general of the Payments Association, told VIXIO. “By integrating several different components, from policing and regulation to technology and consumer care, the strategy has a very good chance of achieving its goals.”

Craddock continued that there is a component in the strategy that must be head and shoulders above others: data sharing.

“Until now, companies have been fiercely protective of their data and scared of sharing data even if reducing harm to customers is the result,” he said. “Now, data sharing is not only possible, but imperative if we are to reduce fraud.”

The Payments Association recently published a report on how data sharing can reduce economic crime.

‘Not commensurate’

The pledges from the government have not impressed, however, fraud experts at the Royal United Services Institute, a UK defence and security think tank.

“Although the strategy includes extra resources for policing fraud, the levels are not commensurate with the scale of the threat,” said Helena Wood, senior research fellow.

“They are certainly not enough to turn around decades of underinvestment in the enforcement response to the crime that affects more UK citizens than any other.”

Meanwhile, Kathryn Westmore, another research fellow, said that more onus needs to be put on tech and telecoms firms, which need to “up their game in the fight against fraud”.

“More needs to be done to incentivise these sectors to commit more resources to fighting fraud, perhaps through the introduction of a new fraud levy,” said Westmore. “Without this, it is hard to see how the government will meet its ambitious targets for cutting fraud.”

Tech companies

The government’s strategy also includes commitments for technology firms. For example, it has committed to making the tech sector put in place extra protections for their customers and will introduce tough penalties for those who do not.

The government has said that it will “shine a light” on which platforms are the safest, which it says will ensure that companies are properly incentivised to combat fraud.

“The fight against fraud has progressed far too slowly in recent years and in particular more action is needed to guarantee that big tech platforms take serious action against fraud,” said Rocio Concha, policy director at Which?.

Concha continued that the government must ensure that the Online Safety Bill delivers meaningful protections for consumers against a flood of online fraud infiltrating the world’s biggest search engines and social media sites.

“It’s positive to see the government at last producing a strategy that recognises a joined-up approach with the ambition that data is shared between industry and law enforcement is needed to tackle the UK’s fraud epidemic, which has such a devastating financial and emotional toll on the lives of victims,” Concha said.

“Ultimately, consumers will judge the success of this strategy by whether they end up with better fraud detection, prevention, support and redress.”

UK Finance has also welcomed the government’s plans.

“We welcome the publication of the government’s fraud strategy, which is a critical step in addressing the serious criminal problem that fraud poses in this country,” a spokesperson for the trade association said.

“The banking and finance industry is at the forefront of tackling fraud, including spending billions to detect and prevent fraud and refunding people who have fallen victim.”

The lobby group nevertheless highlights that the focus cannot just be on financial services. “The only way that will happen is if other sectors take far greater action as criminals clearly exploit vulnerabilities outside the banking sector to commit fraud.”

This has been echoed by some lawmakers in the UK, including Conservative parliamentarian Anthony Browne, who has been announced by the government as a new anti-fraud champion.

In 2021, for example, Browne made headlines when he pressed for the Financial Conduct Authority to look at whether Google is corporately guilty of fraud due to its hosting of paid-for adverts that direct users to scam websites.

“This is an important development and we look forward to working with him as well as the Government and law enforcement to help protect people and businesses across the UK,” said the spokesperson.

Craddock, meanwhile, suggested that the government’s UK Fraud Strategy will only succeed if there is a coordinated, whole-system response to deliver a step-change in the fight against economic crime and the criminals behind it.

“Such a ‘whole system’ response supported by strong leadership will help to remove the organisational silos preventing effective internal data sharing within and between organisations.”

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