Telephone and Online Scams

Debate between Chris Elmore and Tim Farron

Tuesday 4th June 2019 Westminster Hall

[Tim Farron (Westmorland and Lonsdale) (LD)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to the hon. Member for Ogmore (Chris Elmore) for securing this extremely important debate. As he has rightly set out, the growth in recent years of online and telephone scams, which are often combined, is a deeply troubling development. The impact on individuals is colossal.

I can think of three examples that I am working on in my constituency. An early-retired teacher was recently scammed into investing £25,000 into a fake bond through an incredibly plausible copied website of a reputable bank. A young man who works in the arts was recently scammed out of an amount just shy of £50,000; he was presented with what was apparently a bill from Her Majesty’s Revenue and Customs, and was told that if he did not pay, he could be subject to prosecution. A couple who had no conventional pension were convinced by a combination of telephone and online scamming—their computer, but not their online banking operation, was hacked—into transferring nearly £200,000, which has utterly destroyed their retirement. Those are three instances of bright, not terribly elderly people being scammed by sophisticated criminals. It has had a massive impact on those people’s self-esteem; the hon. Member for Ogmore rightly talked about the sense of violation felt by victims of these scams. They have had their lives trashed, and, in one case, their retirement turned upside-down. The impact on the victims of online and telephone fraud is colossal, and we need to be aware of it.

My quick assessment of the people I am supporting through my constituency office is that there has been roughly £1 million of personal fraud perpetrated on individuals across the age ranges. Almost all the cases focused on online fraud. As the three cases I mentioned have not been resolved, we have been successful in getting significant amounts of compensation—full compensation for some—for victims of fraud in my constituency, but in the other cases, there has been nothing as yet, which is completely unacceptable. The hon. Member for Ogmore rightly pointed out the rise in fraud and the amounts of money involved. In the first half of 2018, there was some £95.7 million of online fraud.

I want to draw a correlation, which is not complete, but is hugely significant, with the loss of bank branches and physical banking opportunities in our communities. My constituency of Westmorland and Lonsdale has pretty much the same geographical area as Greater London, though it has a slightly smaller population. Of all our towns and villages, only two retain physical bank branches. In the past three or four years, we have seen the closure of branches in the villages and towns of Milnthorpe, Grange, Ambleside, Sedbergh, Kirkby Lonsdale and others. To a degree, bank branch closures have come about because banks have responded to our changing banking habits. I understand that, but they have pushed it. It makes life a lot easier and cheaper for the banks if we completely relate to them online. It saves them a fortune. Think of the hundreds of thousands of pounds that banks will have saved, in my constituency alone, in wages, rent and overheads by closing down branches. When they have owned the buildings, they have had a huge cash sale capital receipt, and the money they have saved has gone into their profits.

There is also a correlation between the increase in online fraud and the decrease in the number of bank branches in our communities. Recklessly, banks have put customers—particularly, but not exclusively, older ones—at greater risk, while saving millions upon millions of pounds. I do not say that there is no business case for some branch closures, but the banks have been reckless, and have done nothing—or very little, having left it very late to do anything—to help victims of the increase in fraud as people who feel less comfortable going online have become more likely to feel obliged to do so. The banks have increased risks to their customers—our constituents—while saving themselves a fortune.

Authorised push payment scams are key to what we are talking about. We should welcome the voluntary code that came in just a few days ago, which I hope will result in significant changes. At the moment, if someone has been the victim of an unauthorised scam—in other words, if someone else has got hold of their details and taken money out of their account—nine times out of 10, or perhaps 99 out of 100, the bank will compensate them. If, however, someone has been fooled into moving some money out of their account themselves, as in the three instances I just related, nine times out of 10 they are on their own. The authorised push payment scams voluntary code ought to mean that future victims of authorised push payment fraud will be compensated.

Of course, all the people I have spoken about—indeed, all the people we will talk about today—are historical victims. Whether they were scammed in the last few weeks or the last few years, they stand to get not a penny of compensation. It is very good to see the Minister in her place. I really want her to focus on what we will do to help people who have been victims historically, which is everybody apart from those scammed in the last week. I ask her to take action so that the code can be applied retrospectively to all victims of authorised push payment scams.

The hon. Member for Ogmore rightly talked about the need to catch the criminals who do something so utterly despicable. My police force in Cumbria is under enormous resource constraints, but is doing a good job, in so far as it can, in providing support. In recent days, local media have reported on the relatively small number of police available to respond to incidents in our community. One of the reasons for that is that many have been taken off to do this kind of work. It is important to recognise that our police force must be given additional resource to catch those who are guilty of such crimes, and to support victims.

[Chris Elmore]

I thank the hon. Gentleman for taking part in the debate. I am in the police service parliamentary scheme. What struck me when I met one of the victims of such fraud is the sheer scale of the paperwork that the police have to complete. They told me that that is because the back-office functions have been cut, as there is no funding, which creates additional pressure. The police want to deal with these cases. The hon. Gentleman is right that there are not enough officers to do so, but it is also about the paperwork involved, because the fraud is so complicated. The police have to have an hour’s discussion with the person who has been defrauded. Does he agree that there has to be specific funding, not just for trading standards but within the police, so that they can tackle the problem as broadly as possible?

[Tim Farron]

I am grateful to the hon. Gentleman for raising an important point. One issue is resource; another is time and expertise. We are not dealing with stuff that is simple to fix. He is right that one of the impacts of, let us be honest, the underfunding of our police service in the last few years has been that police commissioners seek to protect the number of visible police officers, for good reasons and because it is politically sensitive. How do they then save money? They get rid of all the admin staff. Police are therefore unable to focus on frontline policing, because they are taken off to do the admin work that the back-office staff used to perform.

Banks are saving perhaps hundreds of millions of pounds by closing branches and changing the way in which we relate to them, but they thereby put our communities at greater risk of online and telephone fraud. There is a real opportunity for the Government to take—not in a punitive way—a small fraction of the profits that banks have made by closing those branches. That windfall tax could be used for two purposes: compensating victims and resourcing our police service properly, so that we can protect people.

I would love the Minister to give us more information on those two points. First, will she backdate the code and ensure that it has teeth, so that historical victims of authorised push payment scams are compensated, as well as future victims? Secondly, will she consider a windfall tax on the banks, based on the profits they make from closing so many branches, so that we can resource our police properly, in order to protect the victims and pursue the criminals?