Financial Fraud and Economic Crime
(2 months, 1 week ago)
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Mr Luke Charters (York Outer) (Lab)
I beg to move,
That this House has considered the impact of financial fraud and economic crime.
It is an honour to serve with you in the Chair, Ms Vaz. I thank the House for allowing me to secure this debate. I also welcome the Minister to their place, and I thank the shadow Minister, the hon. Member for Hamble Valley (Paul Holmes), and the Liberal Democrat spokesperson, the hon. Member for Dorking and Horley (Chris Coghlan), for attending.
I must start by declaring an interest. In my previous role before entering this place, I was head of fraud and compliance for a fintech firm, responsible for screening billions of dollars of transactions a year. When it comes to dealing with financial criminals, unfortunately I have seen it all. From the use of artificial intelligence—
Valerie Vaz (in the Chair)
Order. Apparently, there is an acoustic problem for everybody sitting in the front row. Could the hon. Gentleman move to the back as the mics are not working?
Valerie Vaz (in the Chair)
I am really sorry, but Hansard may not have picked up the earlier part of your speech, so could I ask you to start again, please? Thank you very much. You are doing a grand job for your first attempt.
Mr Charters
With apologies to right hon. and hon. Members who will be hearing the same thing, I will start again.
It is an honour to serve with you in the Chair, Ms Vaz. I thank the House for allowing me to secure this debate. I also welcome the Minister, and I thank the shadow Minister, the hon. Member for Hamble Valley, and the Liberal Democrat spokesperson, the hon. Member for Dorking and Horley, for attending.
I start by declaring an interest. In my previous role before entering this place, I was head of fraud and compliance for a fintech firm, responsible for screening billions of dollars of transactions a year. When it comes to dealing with financial criminals, unfortunately I have seen it all. From the use of artificial intelligence avatars to bypass biometric screening, to sophisticated shell companies and complex layering, to spearfishing and parasitically targeting legitimate companies to advanced cloning techniques, I cannot overemphasise the danger that fraud and financial crime now pose or the complex layers that exist behind it.
Fraud places an emotional burden on victims. It ruins lives. We all know that as MPs from our surgeries. I will touch on a case that I heard about recently. The criminal aspect of fraud is not just about hobbyists in basements; we are increasingly talking about nation states who in some cases are working alongside advanced organised crime groups that are taking the mantle. They are often experienced professionals who work to circumvent the systems we use. Criminals are smart and frequently shift their modus operandi to get around our systems.
Although the responsibility to be smarter and take that proverbial step ahead falls to Government and firms, the situation is more complex than that. The risks are real, and if scams continue to increase exponentially we will have a dangerous environment for businesses. We will have more constituents telling more stories about how they have fallen victim to fraud, and the national cost could become so undesirable that we may well become the worst developed country globally per capita when it comes to fraud rates. If we do not act, there is a risk that fraud and economic crime could suffocate growth.
We currently suffer from relatively weak national co-ordination in tackling fraud and economic crime, which is made more complex by the fact that the perpetrator is often not in the same geographical location as the victim. This can cause local police forces to deprioritise fraud reports, but if we can fix that, we may be able to fix the foundations. Although the online fraud charter introduced by the last Government was a positive step, it is non-statutory and voluntary. Nothing in the charter addresses the issue of compensating consumers who have been defrauded by content originating online. There are no penalties for non-compliance, and that must be thought through, but we can turn the page.
While this Government are in their early stages, I believe it is time to smell the coffee and grasp the nettle —whichever analogy hon. Members prefer—so that we can become a world leader in anti-fraud and protecting consumers and businesses, and become a country where companies want to do business and will not be ripped off. The prize is that our fintech, regtech and financial services sector will want to become ever more internationally competitive if we truly get to the heart of fraud and economic crime.
Before I go any further on how we can make some fixes, I will quantify the challenges that we face. Fraud accounts for more than 40% of crime in the UK but receives only 1% of police resources. That statistic is chilling, but wait until we hear the cost of payments fraud to the UK economy: it is roughly £1.2 billion. There is also a cost to individuals. I have a constituent who attended an advice surgery just this weekend and told me that they had lost life savings, to the tune of a five-figure sum. Fraud often hurts the most vulnerable, either those on low incomes or those with lower tech proficiency, who are also more likely to fall victim.
However, more than three quarters of authorised push payment fraud originates online. Research from Innovate Finance on fintech illustrates the challenge posed by online purchase scams. It found that Facebook Marketplace represented a staggering 51% of all fraud cases for the firm in question. After I secured this debate, a main UK bank got in touch with me outlining similar statistics in which a huge part of the fraud that it encountered originated from Facebook Marketplace, so we must get better at stopping fraud at the source. There are some positives to consider: tackling payment fraud could contribute £6 billion to the UK’s GDP over five years, which would really strengthen our economy.
A smorgasbord of issues are causing our downfall, so I will outline seven positive steps to begin to tackle fraud and economic crime. They come from meetings that I have had with trade bodies, consumer groups, banks and payment providers and from many industry reports. We can become a world leader in anti-fraud and economic crime. Little investment is needed from the Government, but a new regulatory apparatus and new levels of co-ordination are needed. I stand as a firm friend to the Minister and the Government in making that change happen, so I will outline some positive suggestions for tackling fraud.
Recommendation 1 is that the new Government should set an anti-fraud target. In June 2023, the previous Government published their fraud strategy, saying that they would cut fraud by 10% on 2019 levels by December 2024. They achieved that, but the target was not ambitious enough and, importantly, excluded businesses, so the Government should commit to a fraud target that is genuinely ambitious and do so in collaboration with business. I do not want to pick an arbitrary number, because it is about focusing on action rather than aims, so one option is to set a target that we should have a lower fraud rate per capita than international peers—for example, an ambitious target that the per capita rate of fraud should be lower in the UK in five years’ time than that in France, Germany and other countries.
Recommendation 2 is for the creation of a new national anti-fraud centre. We need a strong new anti-fraud centre to face the complex interdisciplinary challenges that fraud poses. Action Fraud has skilled individuals, but regrettably it is no longer fit for purpose. That is my view, and often the view of industry. We need to reform it, and that means a review of its shortfalls, as well as the ways in which we can build on some of its successes in receiving reports. During my career, I came across a case in which a UK business was scammed out of more than £200,000. It submitted dozens of pages of detail to Action Fraud, and did not even get a call back from the police.
We should look to Australia and create a national anti-fraud centre to drive forward the Government’s fraud strategy with a clear vision and clear accountability. It could be part of the Serious Fraud Office or the National Crime Agency, or it could be its own entity, but it should be able to bring charges. The Australian Labour Government launched a cutting-edge national anti-scam centre in 2023. They rightly recognised the scale of the challenge, and took it on directly. The first action was to tackle investment scams, before disrupting criminal gangs who were advertising non-existent jobs. It is time to refresh the ecosystem that will fight fraud for decades to come, with a strong new national anti-fraud centre at the heart of Government. That would join up the SFO, the Financial Conduct Authority, Action Fraud, the NCA, the Met police, the National Fraud Intelligence Bureau and local police forces, and it would do that with a central leadership, because our institutions are currently too fragmented to properly deal with fraud.
Recommendation 3 is that this Government should replicate the previous Government’s appointment of an anti-fraud champion in Parliament. The appointment of an anti-fraud champion would ensure better co-ordination across Departments and could be a precursor to a new national anti-fraud centre.
Recommendation 4 is that we should support data sharing between sectors. We have to create a framework to enable data sharing between social media companies and payment participants. If information can be shared between the two, there is an opportunity to stop transactions at the source. Because of GDPR, there is no clear mechanism for data collaboration, but if we can find a way to create a precedent, that would provide regulatory certainty.
Recommendation 5 is to create a new framework that requires banks to share payment data. If we are to make progress, we need to find a way for banks to work collaboratively on payment data sharing. I regularly meet banks and industry leaders who are receptive to that recommendation.
Matthew Patrick (Wirral West) (Lab)
I declare an interest: prior to entering Parliament, I worked at Pay.UK, the payment system operator for the UK. I thank my hon. Friend for securing this important debate. He raises an important point, not just about the cost of fraud to people and businesses, but about data sharing across banks. Does he agree that a modernised payment system might allow us to collect more data, which could be used across the industry to identify, tackle and prevent fraud at the source, saving businesses and customers lots of money in the future?
Mr Charters
It is brilliant to have Members such as my hon. Friend, with his experience at Pay.UK, in this place, and I completely agree about the renewal of the payments architecture. If it had risk analysis and artificial intelligence monitoring at its heart, we could detect payments fraud at the very centre, which could save banks billions of pounds in compensation and be a better result for consumers.
Industry innovations such as “money mule insights” prove that the latest data analytics allow for much more sophisticated ways of targeting of criminals via data sharing between payment providers. Lloyds Bank got in touch with me this week to highlight that its mule-hunting team had identified a 44% increase in money mules over the past year. Data sharing between banks is critical in targeting money mules. At present, banks file suspicious activity reports, but they are often unable to share suspicious payment transaction data with each other. If they did, there would be an opportunity to harness suspicious payment data to detect and block fraudulent and criminal transactions in real time. I now believe that we have an unmatched opportunity to rebuild fraud and economic crime analysis with the renewal of faster payments and a new payments architecture. In conclusion on this recommendation, much greater payments data sharing is crucial if we want to stop fraudulent transactions from being processed.
Let me turn to recommendation 6, on the obligations on social media companies. The Government could introduce a shared responsibility and liability for social media and telecommunications firms to tackle fraud origination and incentivise them to invest to prevent fraud. A new anti-fraud centre could govern regulatory powers over social media companies and impose penalties or issue guidance to reduce fraud. That would tackle the things we heard about earlier, such as fraud originating from Facebook Marketplace.
I turn to my final recommendation: to expand the Financial Conduct Authority’s powers over the Post Office, which is the biggest cash provider in the country, through its everyday banking service, and has always played an integral role in providing access to cash for the nation. That should continue. As banks close their branches, the importance of the Post Office is growing. However, following the Horizon scandal, its reputation has been damaged. The Horizon system is still fundamentally being used today for the everyday banking service, which processes billions in cash deposits and withdrawals each and every month. To give banks and consumers confidence in the Post Office, the FCA should gain direct regulatory oversight of the everyday banking service. That is critical for resilience and managing financial crime risks. I can confirm that I am in the process of writing to the FCA’s CEO to encourage them to provide an update on their work on money laundering via the Post Office.
In conclusion, those are seven recommendations that I would like to implement. I think they would have a huge impact on our ability to better target fraud and economic crime. I will write to the Government outlining the recommendations, which are the culmination of meetings across industry, and I stand willing to work closely with them on implementing them, should they be interested in doing so. I look forward to hearing from colleagues across the House in the debate and to working constructively with Government and other hon. Members to tackle fraud. It is crucial we do that for financial credibility, for our constituents and for our country.
Valerie Vaz (in the Chair)
I thank the hon. Member for his assistance. I expect to take the first of the Opposition spokespersons at 5.08 pm. They will have five minutes each and the Minister will have 10 minutes. If hon. Members wish to speak, they should bob.
David Burton-Sampson (Southend West and Leigh) (Lab)
I welcome the Minister to his place and congratulate my hon. Friend the Member for York Outer (Mr Charters) on securing this massively important debate. This is a subject that I have been more than aware of throughout my entire professional career. In the light of that, I also declare an interest: I have been working in the financial services industry for many years.
According to the UK fraud costs measurement committee, the level of fraud in the UK directly affecting consumers in 2023 was estimated to be a staggering £8 billion. The former Conservative Government did not prioritise economic crime sufficiently, according to the Treasury Committee. Now, it is up to the new Government to take action to improve the supervisory system and combat economic crime, which is growing. Improvements need to be made to assess the extent of economic crime and fraud in the UK—it is telling that there are no clear measures of the true impact of fraud on individuals, businesses and the economy. Some of my hon. Friend’s suggestions will help us to get a real understanding of the impact.
A wide range of crimes fall under the category of fraud and economic crime, and the sums of money involved range from small to huge. To give a personal example, only last month in my constituency in Southend, some of my constituents were left feeling tricked, over—believe it or not—an inflatable fun day. They bought tickets in good faith, but it was a fictitious event. Some parents were left out of pocket after buying a number of the £15 tickets online, and clearly children were left very upset. Those sorts of things should not happen, but it is one small example of how fraud can impact families on a day-to-day basis.
The police force in my county of Essex has a serious economic crime unit, which seized £2 million-worth of assets and made 15 arrests in February alone after an intensive, month-long investigation. The squad investigates offences including romance scams, online marketplace scams, rogue traders, investment fraud, bribery and corruption.
As my hon. Friend the Member for York Outer mentioned, fraud can have a devastating impact on individuals and their families, affecting not only their finances but their wellbeing, leaving them feeling manipulated and deceived. Of course, there is the long-term impact on their finances, which has a knock-on impact on the economy, as people no longer have their hard-earned savings to spend on much-needed goods and services, or just on enjoying themselves.
As I have mentioned, my background before coming to this place was in financial services, most recently in mortgages. With your indulgence, Ms Vaz, I will share a different type of fraud, where the consumer often unwittingly targets the lender. It is not usually out of malice, but done with the desire of achieving their housing dream, which for many can be seen as out of reach due to loan-to-income restrictions and high deposit requirements. Mortgage fraud can include overvaluing properties, overstating a salary or income, concealing a second mortgage from the primary lender or mis-stating the use of a property to either benefit from a more preferential rate of interest or to borrow more than the lender assesses that a client can afford.
The UK’s leading fraud prevention service, Cifas, revealed in January 2024 that one in six of UK adults—16%—admitted that they or somebody they knew had misled mortgage companies about their annual salary in order to buy their home. I agree with Cifas that more needs to be done to raise awareness of how serious a crime mortgage fraud can be. Not being honest about one’s income, debt history, employment or the value of the property is a serious matter. Being caught will have long-term effects on one’s ability to gain a mortgage, and could have other financial consequences.
I call on the Minister and the new Government to work with the relevant partners and stakeholders to strengthen and expand the fraud strategy that was announced in May 2023 to combat the ever-growing and more sophisticated fraudulent schemes that target individual consumers. Equally, awareness needs to be raised among consumers about the consequences of them falling unexpectedly into the world of fraud when applying for finance, especially mortgages. I would like to see collaboration between banks and other lenders, the regulator and the Government, to drive awareness of mortgage fraud through misrepresentation. That, of course, would be complemented by the Government’s plans to make the dream of home ownership more accessible for all.
Jim Shannon (Strangford) (DUP)
It is a pleasure to serve under your chairship for the second time today, Ms Vaz.
I thank the hon. Member for York Outer (Mr Charters) for setting the scene so well. One of the great things about debates with new Members is that they bring their expertise, knowledge and interests in various subject matters to our debates, which enriches the House greatly. I very much look forward to contributions from other hon. Members when the time comes.
I am pleased to see the Minister in his place. He and I have been friends a long time while on the Opposition side of the Chamber, as it was. I am pleased to see him in a place that is a well-deserved honour for him. I am also pleased to see the shadow Minister, the hon. Member for Hamble Valley (Paul Holmes), in his place.
I am pleased to speak in this debate in the short time that we have. I have heard of countless economic crime cases, including scams and frauds. Constituents must be aware of the dangers, so it is vital to give some background in discussion of such matters. When I speak, I always bring in a Northern Ireland perspective, and I wish that I could tell the hon. Member for York Outer that things in Northern Ireland are better, but they are not. When he hears the figures, he will probably be shocked at just how bad they are.
Last year, according to the Police Service of Northern Ireland, £23.1 million was lost to fraud over 13 months in Northern Ireland. Between December 2022 and January 2024, there were some 5,412 reports of fraud, with lost sums ranging from £5,000 up to almost—unfortunately—£250,000. I just cannot comprehend how that can happen, but it happened. Those sums were taken by criminals from people’s bank accounts. The figures give an idea of where the scams are and where we need to focus. In 2023 alone, there were 3,400 cases of economic fraud. In many such cases, frauds and scams are committed at a distance through social media, online websites, phone calls and text messages.
I will probably age myself by saying this, but I remember getting a message from a general in Nigeria. My goodness! Right away, my hackles were up, because I do not know any generals in Nigeria. When I was told that I had won $100,000 or whatever it was, I knew I could not have done, because I did not enter any competition, and I had no friends or relatives out there. It was clearly a scam, but they claimed that if I sent them my bank details, they would forward an astronomically large amount of money to me. The point I am making is that if something sounds too good to be true, it probably isn’t true. Someone turns up and says, “You have won this amount of money, just send me your bank details and we will transfer the money to you.” I am not smarter than anyone else—I do not profess to be and am not—but whenever someone comes along with something that is just that good, it cannot be good, so beware.
I want to give the example of an elderly lady who came to see me—I speak for the elderly and the vulnerable as my focus for the short time I have. Just last week, in my office I dealt with an issue where a lady clicked a link on Facebook to lodge money in an online pot to gain interest over a period of time. Her details were given and the £276 immediately taken from her account. The dangers of social media are broad enough, and online fraud and scamming seem to be at a peak. Unfortunately, I see that regularly in my office. We advised her immediately to put a block on her card and to contact the local PSNI to make a report. But she is only one example, unfortunately, of what so many people face on a daily basis, every week in my constituency.
I am just looking up something from Danske Bank, which I belong to. It sends such things regularly, as a wee warning perhaps, and a caution:
“We want to remind you that we are all at risk of fraud, even if you are scam savvy. Bank impersonation scams are on the rise”
—which the hon. Member for York Outer referred to—
“but remember, we will never call you to ask for log-on details, PIN numbers or passcodes, including those we send by text.”
My bank sends that to me every month or every six weeks. If banks did that as a reminder to people to keep it fresh in their minds, it would be very helpful.
The UK economic crime team is responsible for leading the industry’s fight against economic crime, but more needs to be done to support those who are not perhaps tech-savvy, which I profess that I am not: I sometimes do not understand the dangers that are out there. The online fraud steering group has numerous aims in tackling economic crime, including making the UK look like the least attractive place to commit such crimes, but they still happen with a regularity that tells us that that is not the case. Whether internally in the UK, or internationally where foreign actors interfere, we need to ensure that our constituents are protected and, most importantly, aware.
The PSNI back home in Northern Ireland has a crime prevention officer who specifically visits elderly and vulnerable people, including groups who meet every week. They go and talk to them and give them information. I would suggest that that could be done with greater regularity to remind people, because people do need to be reminded on a regular basis.
I will finish now because I am conscious that others want to speak. In terms of money laundering, we have seen terrible examples in Northern Ireland where, to be fair, the PSNI in conjunction with other police forces across the United Kingdom and further afield have been able to get on top of it, but it still happens. There are scams and fraud, so there is more work to be done. I look to the Minister with great respect. I know he will come back with the answers that will perhaps encourage us and give us some hope. I look to him for guidance on his updated plans to make our economic system run smoothly—it has to—and ensure that across the whole of the United Kingdom of Great Britain and Northern Ireland we have a good structure for dealing with the issues and also the means to do so.
Mrs Sureena Brackenridge (Wolverhampton North East) (Lab)
I commend my hon. Friend the Member for York Outer (Mr Charters) for securing this important debate and for shining a light on an issue that has been neglected for far too long.
A growing concern facing my constituents in Wolverhampton North East is the rise of fraud, particularly scams perpetrated from overseas. We often hear calls for more arrests and prosecutions of the criminals, and I fully support that. However, we also need to acknowledge that a significant and increasing number of these fraudsters are not operating from within the UK. Instead they are part of international fraud rings based in hotspots such as India, the Philippines, South Africa, Brazil and parts of eastern Europe.
With advanced technology we have machines capable of making thousands of calls or sending thousands of texts per minute. The criminals can easily target people here in Britain. Our country unfortunately is a prime target for such activity. We do much of our shopping and banking online, and the widespread use of the English language makes it easier for fraudsters abroad to deceive and manipulate their victims here.
The real question is what we do about this. I suggest that when we negotiate trade deals with countries where such criminal activity is prominent, we push for stronger co-operation in fighting fraud. Let us make fraud prevention part of the agreements, giving the countries a real incentive to work with us to tackle the issue. Without such action, fraud will continue to grow, impacting more and more families in places like Wolverhampton North East. It is time we took strong, global, co-ordinated action to protect our residents from the scourge of international fraud.
Valerie Vaz (in the Chair)
I call the spokesperson for the Lib Dems, Chris Coghlan.
Chris Coghlan (Dorking and Horley) (LD)
It is a pleasure to serve under your chairmanship, Ms Vaz, in this brilliant and necessary debate. I commend the hon. Member for York Outer (Mr Charters) for securing this debate on financial fraud and economic crime and for his professional expertise in this area. I should declare an interest: I spent 11 years working in financial services and also worked in the Foreign Office on counter-terrorism, so I know how vital this debate is.
The hon. Member for York Outer made really interesting points in his seven proposals, particularly on the link between tackling fraud and economic growth and his call for a national anti-fraud centre based on the Australian model. The Liberal Democrats called for an online crime agency in our manifesto, so it is something we would be interested in supporting.
We need a dedicated body to tackle online crimes such as personal fraud; our police forces are overwhelmed. Local forces lack the specialist skills required to combat the complexity of modern online crime. Although the National Crime Agency focuses on the most serious offences, we need an agency specifically equipped to deal with online fraud.
Jim Shannon
I commend the hon. Gentleman for making that reference to the NCA. I understand that just last week the NCA issued its first unexplained wealth order in Northern Ireland against a man suspected of involvement in serious organised crime. If anyone is living above their means, there should be questions about where the money is coming from. Does the hon. Gentleman feel that there perhaps needs to be more emphasis on that as well?
Chris Coghlan
I thank the hon. Gentleman for his intervention and I agree that there should be more emphasis on that area. I also thought that the hon. Member for York Outer made a really interesting point about the lack of FCA regulation of the Post Office, and I agree that that appears to be a gap in our existing regulatory framework.
We heard some really moving personal accounts about the cost of these online scams in the speech made by the hon. Member for Southend West and Leigh (David Burton-Sampson). We are also calling for the naming and shaming of the banks that have the worst records on preventing fraud and reimbursing victims. They should be held accountable. Financial institutions have a duty to protect their customers and we need to call them out when they do not.
The hon. Member for Strangford (Jim Shannon) talked about the power of social media scams, and we are also calling for a public awareness campaign. We need to empower everyone to spot, avoid and report fraud and scams. But let me be clear: the onus should not be on individuals to prevent fraud. Victims should never be blamed for falling prey to sophisticated scams. This issue is about building a society that protects citizens and not one that burdens them with responsibilities that should lie with institutions.
As we have heard, the numbers involved are staggering, both in terms of the billions of pounds that have been lost to fraud and the sheer volume of crime that is now online. Despite those facts, however, the previous Government’s response was lacklustre. I was moved by the hon. Member for York Outer’s point that 40% of crime is fraud, including online fraud, yet only 1% of police resources is dedicated to tackling fraud. The previous Government treated fraud with such little seriousness that they did not include it in crime statistics. Will the Minister commit to including fraud in crime statistics to demonstrate the new Government’s seriousness about this issue?
The Government must also recognise that economic crime poses a significant threat to our democracy. For too long, the previous Government allowed oligarchs to treat the UK as their personal playground, so that they could funnel dirty money into our economy and undermine our values. The Liberal Democrats are calling on the Government to begin seizing frozen Russian assets and to use the proceeds to support Ukraine; to close loopholes in economic crime legislation, which allow associates of authoritarian regimes, such as Putin’s cronies, to funnel corrupt funds into our country; and to properly resource the NCA to ensure that it has the tools to tackle complex financial crimes. We are also calling for an audit of UK-based assets owned by officials from countries with troubling human rights records, such as China and Iran, to ensure that we are not enabling regimes that abuse their own citizens.
As a former counter-terrorism officer, I know how important cross-border co-operation is. The hon. Member for Wolverhampton North East (Mrs Brackenridge) really brought out the importance of such co-operation when she made the point that the people conducting these scams are not necessarily all in the same geographical location.
I also know the damage that Brexit caused to our cross-border co-operation on serious and online crime. Will the Minister commit to improving co-operation with our European allies and with other countries more widely on financial fraud and economic crime?
I look forward to hearing the Minister’s response to the debate. It was a pleasure to serve with you in the Chair for this debate, Ms Vaz, and I again thank the hon. Member for York Outer for securing it.
Valerie Vaz (in the Chair)
I call the shadow Minister, who was appointed this morning, to speak.
Paul Holmes (Hamble Valley) (Con)
It is a pleasure to serve under your chairmanship, Ms Vaz, and to be able to respond to this debate on behalf of the Opposition as a newly appointed shadow Home Office Minister, as of this morning.
I congratulate the hon. Member for York Outer (Mr Charters) on securing this debate and thank him for giving us the chance to discuss the serious issues that he outlined. Also, may I put on the record my commiserations to the constituent he mentioned, whom he saw at his surgery last week, for the serious issues that she has faced? I thank the hon. Member for Strangford (Jim Shannon) for as usual showing his knowledge of yet another subject.
Many of us will have been, or know someone who has been, a victim of financial fraud. The hon. Member for Southend West and Leigh (David Burton-Sampson) outlined the various possible targets, from the pensioner who is tricked into giving away their savings by a rogue cold call, to an unsuspecting parent receiving a scam text purportedly from their child asking for money. All ages and sections of society are at risk.
As these criminal schemes become more sophisticated, nobody is immune. We have seen that bank accounts can be emptied in minutes and life savings lost. In 2021, victims reported losing £2.35 billion to fraudsters and scammers. We also know from statistics that it is elderly and vulnerable people who are most susceptible to scams and fraud. To the vile criminals who target them, they are seen as a means to enrichment and to profit from their misery. It is our duty to protect them.
In an astonishing statistic, Home Office figures indicate that the social and economic cost to the UK from economic crime is £8.4 billion a year. Those costs directly impact the lives and livelihoods of millions of citizens, and further exacerbate social and economic pressures. I look forward to hearing reassurances from the Minister, whom I welcome to his role, on how he will continue to make the progress delivered by the previous Government.
We also know, as the hon. Member for York Outer mentioned, that it is not just individuals who are targeted. In a time of increasing global instability, adversaries are constantly probing for weaknesses in our digital financial infrastructure, from cyber-attacks aimed at crippling software, to ransomware attempts to extort money. Our systems are constantly having to update and evolve to keep ahead in a technological arms race. I was interested to hear recommendation 1 in the hon. Gentleman’s speech. I would press the Minister to look seriously at that proposal, which would get support from the Opposition, as he outlines his proposals.
The previous Government showed leadership in this area. They introduced a reporting mechanism that was bolstered by replacing Action Fraud with a state-of-the-art system for victims to report fraud, while a new national fraud squad, with more than 400 new specialist investigators, made fraud a priority for the police. Will the Minister look seriously at the proposal outlined by the hon. Member for York Outer for a new national fraud centre? That is an interesting proposal and I would like to know whether the Government would look at that, as well as at an anti-fraud tsar who would be a champion in this place, to whom hon. Members can go. I know the Minister is a champion and has many responsibilities. We could never go without another champion in this Parliament.
If we take a new approach, we can make a great deal of progress on the 13% reduction in fraud that we saw under the previous Government; indeed we can go further. The need to tackle this growing threat is clear. The economic crime plan, brought forward by the previous Government, for the first time introduced a more effective and joint way of working across various organisations, including law enforcement, supervisory agencies and the private sector, through the landmark Economic Crime and Corporate Transparency Act 2023. Stronger tools were put in place to help us fight economic crime. We are all alive to the threats affecting our national security, with our economy being a prime target for rogue forces. The strengthening of our defences by widening our ability to freeze assets and to prevent abuses of our open economy proved to be key after Russia invaded Ukraine, and we must continue to strengthen our economic defence in the wake of rogue foreign entities.
Finally, we have seen the new Government make lofty statements about their desire to get tough on fraud, with a new expanded fraud strategy, which I welcome. Given recent policy decisions by the Government, going against promises and commitments in other areas made during the general election, I hope that this is not an area where we will let vulnerable people down. I hope that the Government deliver on those promises. We all agree on the need to tackle this issue. It is to be hoped that this Government are as committed and passionate as the previous one about dealing with this issue, so that we can make progress together. The Minister will have the Opposition’s support in tackling this issue.
The Minister for Security (Dan Jarvis)
It is a particular pleasure to serve under your chairship, Ms Vaz. I congratulate my hon. Friend the Member for York Outer (Mr Charters) on securing this debate on what is—there has been a clear consensus about this—a very important matter. I often find myself in agreement with the hon. Member for Strangford (Jim Shannon)—perhaps too regularly—but I completely agreed with what he said about the expertise that we have seen among new Members. I think we have seen that very clearly today, not least from my hon. Friend the Member for York Outer because it came through loud and clear from his speech that he has a strong knowledge and comprehensive understanding of these issues. I think that, collectively, we owe him a debt of gratitude for bringing them to our attention this afternoon. I am also grateful to all those other hon. Members who have contributed to what has genuinely been a very sensible and constructive debate.
I am genuinely grateful to both the Opposition Front Benchers for their sensible contributions. I welcome the Lib Dem spokesperson, the hon. Member for Dorking and Horley (Chris Coghlan). He comes to this place with a lot of hugely relevant and credible experience, and I look forward to working closely with him. He made a specific point—an entirely reasonable challenge—about the importance of seeking to work closely with allies in Europe. I can absolutely give him that assurance. We understand the importance of doing so, and we are on the case with that.
I also welcome the shadow Immigration Minister, the hon. Member for Hamble Valley (Paul Holmes), to his post. On behalf of the Department, I can genuinely say that we wish him well, and that we look forward to working closely with him. I have had quite a busy day, but I am sure that he has had quite a busy one as well in preparing for this debate. As he always does, he made a number of sensible and reasonable points, and I am happy to confirm to him the commitment and the priority that we attach to these important matters. I hope very much that we can work closely together as we move forward.
Based on the contributions that we have had in today’s debate, there is a clear consensus that economic crime and fraud are pernicious threats that ruin lives and damage our prosperity. They must be dealt with as a priority. I want to take the opportunity today to say something about the Government’s approach, as I seek to respond to the many excellent points that hon. Members have raised.
Economic crime threatens our national security and the prosperity of the UK. It covers a broad range of illicit activity, including fraud, money laundering, kleptocracy and corruption. It drives serious organised crime, which has a hugely damaging and corrosive impact, and causes immense harm to the public—to all our constituents. It affects the financial and emotional wellbeing of victims and the interests of legitimate businesses, and undermines our international reputation.
According to the crime survey for England and Wales for the year ending March 2024, fraud against individuals accounts for 36% of crime, so it is by far the most common offence. That is a startling statistic, which underlines the scale of the threat and the challenge, but it does not capture the full horror of the misery and devastation that lies behind the numbers—the stories of life savings snatched, of confidence shattered, of emotional distress.
We know that nobody is safe from fraud; it can affect anyone, with one in 18 people becoming a victim of fraud in the year ending March 2024. Businesses are also under threat: the economic crime survey for 2020 estimated that one in five in the sectors surveyed had been victims of fraud in the previous three years. These figures are another striking illustration of the scale of the threat, and underline why it is so crucial that we eliminate any safe spaces for criminals to operate in.
I should note that the crime survey shows that fraud is down 10% on the previous year, which is encouraging, and I want to thank all those across Government, industry and law enforcement who work to turn the screw on fraudsters and criminals. We owe them a huge debt of gratitude for their important work. A lot of effort has gone into addressing these issues, and that is to be welcomed, but, to address the entirely reasonable point made by my hon. Friend the Member for Southend West and Leigh (David Burton-Sampson), we must now go further.
We know from experience that fraudsters are well organised. They are also opportunists and will try to perpetrate their crimes on anyone they can, including the most vulnerable in our society, which is especially callous. Given we are up against devious and resourceful criminals, we need to ensure that our approach is fit for purpose. My hon. Friend the Member for York Outer clearly has a very strong command of the subject matter, which he has translated into a number of insightful recommendations. The shadow Minister, the hon. Member for Hamble Valley, rightly pressed me to ensure that we will take those seriously.
I hope my hon. Friend the Member for York Outer will understand if I stop short of making policy commitments at this stage and in this forum. That being said, his seven recommendations—the internal mail is clearly working in overdrive because the letter dropped just as he mentioned the seven recommendations—have clearly been very well thought through and are backed up by his considerable expertise. I give him the assurance that I will take them away and come back to him with a response as we continue to shape this Government’s approach. Incidentally, I was particularly intrigued by suggestion No. 3 on the establishment of an anti-fraud champion. I wonder whether he had anyone in mind, but let’s leave that hanging there for now.
Underlying any steps that the Government take, we will be steadfast in our determination to combat economic crime wherever and however it manifests itself. We are committed to working with key partners across the public sector, the private sector and law enforcement to reduce fraud and better protect the public and businesses.
Estimates suggest that around 80% of fraud has an online element, much of which originates from overseas, which was a point very well made by my hon. Friend the Member for Wolverhampton North East (Mrs Brackenridge). Online platforms, as well as telecommunications services, are being exploited by fraudsters to commit their crimes. It is vital that we pull together with industry, regulators and consumer groups to consider what else can be done to close the gaps that criminals exploit.
The sector charter programme works to complement legislation and move in a more agile and targeted manner, and has improved collaboration with industry. It has enabled effective changes within sectors such as telecommunications, retail banking, tech and accountancy. We have seen telecommunications companies install spam shields, which have blocked over 1 billion text messages. The tech sector—I know my hon. Friend the Member for York Outer knows a lot about this—has introduced verification measures for marketplace sellers and advertisers to make sure people are who they say they are. Although we have seen strong action from companies, including via the sector charters, it is important to ensure that counter-fraud activity is prioritised. Recent legislation, such as the Online Safety Act 2023, will help to raise standards and best practice, but we remain open to the use of further legislation and regulation in the future, and that is a continuing conversation that we will want to have with my hon. Friend and with Members throughout the House.
There is still plenty more for Government and industry to do together, and I look forward to collaborating with our key partners in the coming months. We must also increase the disruption and prosecution of fraudsters. A national fraud squad of 400 new posts, led by the NCA’s national economic crime centre and the City of London police, will target the most harmful fraudsters. This will transform the law enforcement response by taking a much more proactive and intelligence-led approach to disrupting the most serious fraudsters, both domestically and overseas.
Another important element is public awareness. We need to ensure that people are alert to these crimes, and it is essential that we have the tools to protect people so that they have the confidence and trust to come forward and report cases where they have fallen victim to fraud. That is why we are working with the City of London police to create a new police “fraud protect network”, which will engage with local forces to provide consistent messaging and safeguarding advice to local communities. That is why there is a wealth of advice on how to spot and avoid fraud on our “Stop! Think Fraud” campaign website, although I note the comments of my hon. Friend the Member for York Outer about that.
As well as protecting individuals, the Government are committed to protecting businesses from fraud and other related crime such as ransomware. The Home Office supports a network of regional cyber-resilience centres to provide cyber-security advice and guidance to businesses across England and Wales.
We are also committed to improving economic crime legislation. The economic crime measures in last Session’s Criminal Justice Bill did not make the statute book before the general election was called. Since the election, the Government have been examining how best to progress action in a number of areas, including the reform of the criminal confiscation regime, the banning of SIM farms that can be used in fraudulent activity, accessing money in suspended accounts to further tackle economic crime, and improving corporate liability laws. We understand that those are important reforms to cut crime, but also that there will be others. We will set out our position in due course and, where necessary, introduce further legislation.
In closing, I thank all hon. Members attending for their contributions and once again thank and congratulate my hon. Friend the Member for York Outer on securing the debate. We have covered a good deal of ground, all of it constructive and helpful. For all the statistics, policies and measures, it is the victims who we must always keep at the forefront of our minds. We must prevent more people and businesses suffering as a result of economic crime and fraud, and we must protect our society and economy from those threats. As I have set out, this Government are committed to doing just that, and I look forward to working with colleagues across the House on this critical endeavour.
Mr Charters
Thank you for chairing the debate, Ms Vaz. I am delighted that the House has been able to consider today’s motion. It is a matter of real importance and one that it is clear the Government will take seriously. I am grateful to the Minister for attending the debate, and to the shadow Minister and the Lib Dem Front Bencher for engaging, too. I am grateful to the Minister for considering my seven recommendations. The Members who have contributed are powerful advocates for their constituents. Many have experienced constituents coming to their surgeries and sharing harrowing stories of being scammed. I hope to work with some of the Members present on these issues over the months and years ahead.
I outlined in my maiden speech that under this Government there should be
“no safe harbour for fraudsters, no compromise in our pursuit of their schemes and”
—importantly—
“no escape from justice.”—[Official Report, 17 July 2024; Vol. 752, c. 124.]
More than that, I am encouraged by the Minister’s words and know that this Government take fraud seriously. By the end of this Parliament, I hope we can look back and see that we have made huge steps forward. We can become a world leader in tackling fraud once and for all.
Valerie Vaz (in the Chair)
I thank the audio technician for sorting the problem out earlier.
Question put and agreed to.
Resolved,
That this House has considered the impact of financial fraud and economic crime.