Financial Services and Markets Bill

Debate between Baroness Kramer and Lord Northbrook

Committee stage
Monday 6th February 2023 Grand Committee

[Lord Northbrook (Con)]

My Lords, I declare an interest as a consultant to an FCA-regulated investment management firm. Like the noble Lord, Lord Hunt of Kings Heath, and others I find it disappointing that the Bill fails to address the growing problem of financial fraud.

There was an interesting article in the Times on Saturday. It said that

“according to the National Fraud Intelligence Bureau, in the last 13 months there has been a reported loss of £4.3 billion from fraud and cybercrime. That is an eyewatering amount of money going into the pockets of criminals … Criminals are getting away scot-free but what is even more worrying is that they know that it is unlikely that any law enforcement are looking for them. This is not because the police are not interested, but simple maths. According to the Social Market Foundation, in 2021 in England and Wales just 1,753 officers and staff were dedicated to economic crimes such as fraud. That equates to just 0.8 per cent of the total workforce and yet”—

as other noble Lords have said—

“fraud accounts for 40 per cent of all reported crime. In many cases … the victims were simply given a crime reference number by the police and told there was nothing more they could do. It remained up to them to try to get their money back from their bank.

If one is determined to find the culprits, an alphabet soup of crime agencies such as the NCA, NECC and NCSC, all with different remits and jurisdictions, awaits. Most people give up and the scammers get to keep their cash.


Unless we increase the number of officers and staff that investigate fraud to reflect the amount of fraud reported we will continue to lose billions to criminals.”


Clause 62 addresses the issue only partly. It enhances protections for victims of authorised push payment fraud, which, according to the shadow Treasury Minister in the other place, quoting UK Finance figures, reached an all-time high of £1.3 billion in 2021. In the other place, the Government promised a review without giving a timescale, but more immediate action is needed.

The Bill ignores the fact that digitally savvy criminals are increasingly exploiting a range of financial institutions, such as payment systems operators, electronic money institutions and crypto asset firms, to scam the public. As my noble friend Lord Naseby mentioned, UK Finance pointed out that, in 2021, 44% of fraud was authorised push payments, about 40% was payment card fraud and 15% was remote banking.

As several noble Lords have already stated, last November, our House of Lords Fraud Act 2006 and Digital Fraud Committee released a report stating that the Government should introduce a new corporate criminal offence to ensure that big tech platforms and telecom companies tackle financial crimes. Under the Online Safety Bill, which is currently going through its stages, online platforms will face a duty of care to protect their users from fraud, but that Bill does not cover telecoms and other related sectors. It is a very good step but more needs to be done, including requiring tech companies to publish data on the nature and volume of scams on their platforms.

Of the amendments in this group, I am very much in favour of the all-encompassing Amendment 209 from the noble Lord, Lord Tunnicliffe, particularly as it includes, under the proposed new subsections (3)(d) and (e),

“telecommunications stakeholders, and … technology-based communication platforms”.

I have been disappointed by the Government’s reaction so far. Although Mr Griffith said in the other place that the Government

“are dedicated to protecting the public from that devastating and sadly growing crime”,

he also said that the Government want

“to be right rather than quick”.—[Official Report, Commons, 7/12/22; cols. 446-47.]

Well, one can be right and quick. As with several other points on this Bill, such as credit card monitoring, the Government do not seem to be moving very fast at all. If we believe the Sunday press, something may be happening, but I await the Minister’s response with interest.

[Baroness Kramer (LD)]

My Lords, the Minister will have picked up the mood of the Committee and I hope she takes it into consideration when she looks at and decides on her remarks. The concern that has been expressed from all sides of the Committee on fraud and the absence of action on it is loud and strong.

I support all the amendments in this group, including those from my noble friend Lady Bowles, and the noble Lords, Lord Hunt, Lord Davies and Lord Tunnicliffe. I particularly recommend my noble friend Lady Bowles’s Amendment 214, which goes after the enablers and facilitators with a “failure to prevent” clause. This group is continuously overlooked and is absolutely pivotal. Action in this area could be really effective and leverage some significant change.

My Amendment 217, in a small way, tries to counter one of the reasons why financial fraud flourishes: the lack of resources for investigation and enforcement against the perpetrators. The noble Lord, Lord Sikka, has addressed some of this.

I, too, am a great fan of Anthony Stansfeld and his personal courage in deciding, as the then police and crime commissioner of Thames Valley Police, to pursue the HBOS Reading fraud case when others had turned it away. That fraud amounted to £800 million and six people—I thought that it was five but the noble Lord, Lord Sikka, said six—went to prison. However, the fine that was levied on Lloyds, as HBOS’s parent, was £45 million. As the noble Lord said, not a single penny of that went back to Thames Valley Police even though the pursuit of the case cost that force £7 million. The consequence of that was heard loud and clear by police forces across the country. They expected that, because of its success, Thames Valley would end up getting reimbursed, and saw clearly when it did not. Since then, no police force has taken on a major case of financial fraud; that dates back to 1977. Frankly, it is a failure of duty. I hope that the Government will finally understand the consequences of that kind of funding decision.

Financial Services and Markets Bill

Debate between Baroness Kramer and Lord Northbrook

Committee stage
Monday 30th January 2023 Grand Committee

[Lord Northbrook (Con)]

My Lords, I listened with interest to my noble friend Lady Noakes moving her amendment. Clearly, consumer credit is at a record level, due, I am sure, to a long period of low interest rates. I just find, probably deliberately, that the amendment is a little vague. Like the noble Lord, Lord Tunnicliffe, I like the idea of focusing on specific issues such as buy now, pay later. Perhaps more power should be given to the FCA to look at institutions that are offering huge rates of interest on loans.

[Baroness Kramer (LD)]

My Lords, I take a slightly different view on the two amendments in this group.

I say to the noble Baroness, Lady Noakes, on her amendment that I am entirely sympathetic to the idea that we need an up-to-date Consumer Credit Act sooner rather than later. However, I am concerned about the absence of parliamentary engagement in the process. To understand how controversial this is, we just have to look back at some of our discussions on amendments earlier today in which Ministers prayed in aid the Consumer Credit Act for taking no action to protect, for example, small businesses from abuse by a great variety of lenders. It is quite a controversial Act, in many ways, and it is one where, when the Government enter into a review, there tends to be quite a bit of industry capture, as we see in virtually all consultations. Essentially, Parliament tends to be the body that brings forward the consumer voice, so the absence of parliamentary engagement in the process as envisaged in the noble Baroness’s amendment troubles me hugely.

I say to the noble Lord, Lord Tunnicliffe, that we are very supportive of his amendment on buy now, pay later. I am disturbed by the growth of the industry, particularly at a time of such huge economic pressure. I think something like 17 million people in the UK have used buy now, pay later, with two in five young people using it regularly. It is particularly around young people that there is the greatest concern because they lack life experience to recognise the consequences of their purchasing habits and find it particularly tempting to exceed the budget that they should observe because buy now, pay later makes it sound so utterly painless. In discussing this issue, many people have looked at what happens to people when repayment eventually becomes due: individuals find themselves is very deep trouble indeed. That is one of the reasons why I am supportive of this amendment.

I have to say that I get angry with many of the companies that offer this because credit is never free. Someone is picking up the time value of money; in other words, the cost of the financing, the cost that is embedded in the reality that payment comes later. That presumably encompasses all the people who pay on time. I am curious to know whether we have any kind of assessment of how much more people who pay on time are paying as they pick up the cost of the credit that is extended to others. I think there might be some backlash to buy now, pay later, if people were conscious of what is added to their bills as a consequence. I admit that I am one of those stuffy people—I am sure we are laughed at—who pay on time rather than trying to use some mechanism to provide credit, so I admit to a personal interest but, in the end, young people may find themselves trapped.