Crime and Policing Bill

Lord Katz Excerpts

Committee stage
Wednesday 7th January 2026 Lords Chamber

[Lord Davies of Gower (Con)]

My Lords, I thank the noble Lord, Lord Vaux of Harrowden, for bringing forward this amendment, which addresses a very important issue. According to UK Finance, authorised push payment fraud accounted for almost 41% of fraud losses in the first half of last year, while unauthorised fraud decreased by 3% on the year. APP increased by 12%. It is clearly a pressing issue, and I am grateful that we have the opportunity to debate it.

The proposition in question would require technology and telecommunications companies, first, to owe a duty of care to their customers to prevent fraud occurring on their platforms and services in general. I do not see an issue with this in principle. Companies should attempt to protect their customers from fraud by implementing general safeguarding measures that prevent against common tactics such as impersonation. I would rather that this did not come from government intervention but was instead the product of a competitive industry, but I recognise that there is only so much that the market can achieve in the short term. I look forward to hearing the Government’s position on this.

I am a little more hesitant to offer support to the second condition of the noble Lord’s amendment, which would require technology and telecommunications companies to contribute to the costs of reimbursing victims of APP fraud that has occurred on their platforms or services. While I acknowledge that there is already an existing framework for company reimbursement in the form of the PSR’s mandatory reimbursement measures of October 2024, I am not certain that the policy is transferable to technology and communications companies.

The PSR requires banks and payment firms to split reimbursement costs evenly between the sending and receiving institutions, and it is very easy to discern which companies are responsible and therefore liable for payment. Adding technology and communication companies into that framework is not so straightforward. These companies are essentially a third party in the actual fraud occurring: they are neither the sender nor the recipient of the defrauded money; they are the medium through which fraud is made possible but not through which it actually occurs. Responsibility for the fraud and subsequent reimbursement does not seem to me to be as clear cut with technology companies as it is with banks and payment firms.

Secondly, the second measure in the noble Lord’s amendment is not thorough enough to support, even if my worries were addressed. The PSR mandatory reimbursement policy, enacted a year and a half ago, was the product of almost seven years of deliberation and policy-making; extending this measure to a whole new industry should face more scrutiny than that which can be achieved for a single amendment. The amendment itself raises questions as to which companies will qualify, what will their contributions be, and how these will fit within the existing requirements placed upon banks and payment firms. These are just a few questions, but there are many more that will need answering if we are seriously to consider this measure as a law.

That is not to say that APP reimbursement has not proved an effective tool in mitigating the harmful effects of fraud. According to the 12 months of available data since the PSR introduced mandatory reimbursement for APP fraud victims by banks and payment firms, 88% of lost money in scope has been returned to victims. Nor is it to say that technology and communication companies will not in future be the vehicle by which APP is committed—ever-popular social media and the ever-increasing AI industry will make sure of that. It is simply to say that we do not know enough about the implementation of this measure to support it. I appreciate its aim, and I agree that something must be done to tackle this specific type of APP, but at the moment I am not sure that the amendment adequately achieves that, so I look forward to hearing what the noble Lord has to say in closing.

[Lord in Waiting/Government Whip (Lord Katz) (Lab)]

My Lords, this Government are deeply concerned by the devastating impact online fraud can have on individual victims, both financially and emotionally. I am grateful to the noble Lord, Lord Vaux of Harrowden, for tabling this amendment, to the noble Lord, Lord Young, and to the noble Baroness, Lady Doocey, for helping us to understand and acknowledge the importance of this issue. The Government recognise the importance of preserving trust in digital communications and online spaces in order that all our hard-working businesses operating in the UK can grow and prosper. We recognise that incentives are important for accountability for all stakeholders.

The Government have seen a significant contribution from the banking sector in preventing fraud and supporting victims in response to the Payment Systems Regulator’s new authorised push payment scams reimbursement requirement. In the first nine months of the APP reimbursement scheme, 88% of eligible losses were reimbursed, with £112 million returned to victims. These figures reflect a strong and sustained commitment to protecting consumers—a positive trajectory that deserves recognition. While we are on the PSR scheme, the noble Lord, Lord Vaux, asked about the transition of PSR into the FCA. It is worth noting that we consulted on that planned merger of PSR into the FCA in September and October last year. We are currently considering the responses to that consultation and will bring forward further proposals in due course. He would expect me to say that we want to manage this process in a way that very much does not undermine the work that the Payment Systems Regulator is already doing to ensure that this system works well.

However, every part of an ecosystem must play a meaningful role in fraud prevention, including the telecommunications and tech sector. The Government have already taken steps to ensure that the tech and telecommunications sectors are rightly incentivised to proactively tackle fraud on their networks. The Online Safety Act requires in-scope companies to take proactive steps to stop fraudulent content appearing on the platform and to remove fraudulent material quickly when they become aware of it. If they do not, they risk facing the full regulatory costs of failing to comply, which can extend to 10% of their global revenue.

Ofcom’s duties on user-generated content are now in force in relation to several online harms, including fraud, and the regulator is already assessing platforms’ compliance. Further duties concerning action against fraudulent advertising will be consulted on this year and are likely to come into effect in 2027.

The telecoms sector is subject to regulation that requires providers to block calls that appear to be from scammers and to prevent scammers from using telephone numbers. It is fair to point out that there has been a fair amount of success already in that effort. Voluntary action has proved effective, and under the first telecoms charter operators have introduced firewalls that have stopped more than 1 billion scam text messages since January 2022, so that indicates the scale of both the problem and the progress that has been made.

We are also working with the sector and Ofcom on a number of innovative further actions to tackle the criminal abuse of telecoms networks. The Government launched the second Telecoms Fraud Charter in November 2025. This is an ambitious charter that covers 50 actions the telecoms industry will implement to tackle fraud within the sector. It includes developing new AI systems to detect and prevent fraud, building a new call-tracing system to track down fraudulent communications and upgrading the UK’s networks to enable new features to protect customers from spoof calls. This is a voluntary commitment from the telecoms sector that aims to strengthen efforts to further identify, block and disrupt telecoms fraud through enhanced industry collaboration and robust duty of care towards UK consumers and smaller telecoms businesses that have themselves been victims of fraud. The previous Telecoms Fraud Charter helped UK mobile network operators to block over 1 billion scam messages through the implementation of firewalls. We want to go further than that, which is what the new telecoms charter seeks to achieve.

In addition, Ofcom launched a consultation in October, outlining new rules on how mobile providers must stop scammers sending mobile messages. These proposals draw on existing best practice in the mobile sector and are intended to both prevent scammers accessing mobile messaging services and stop their activities where they have gained access. Last July, Ofcom also published a consultation on new rules to stop scammers outside the UK reaching people and businesses with calls that imitate UK mobile numbers, and these are likely to be introduced this year. We expect these measures to address gaps in the industry’s existing counterscam measures, and to significantly reduce the risk of individuals and businesses receiving scam messages.

Furthermore, in the upcoming fraud strategy, which we discussed earlier in Committee, and which was mentioned by the noble Lord, Lord Vaux, the Government will explore options to make it harder for criminals to exploit UK telecoms networks to commit fraud. The noble Lord tempted me to stray off the primrose path of prudence when it comes to timing; I am afraid I cannot do any better than repeat what my noble friend the Minister said: it will be coming in due course. Obviously, we have some time left even in Committee, let alone further stages of this Bill, so I am afraid I can make no commitments there.

The Government will continue monitoring developments in this area to ensure the telecommunications and tech industries remain accountable for delivering on their commitments to tackle fraud and the criminal abuse of their services, in line with the plan we will set out in our soon-to-be-published fraud strategy. However, where insufficient progress is being made in reducing abuse of telecoms networks or tech platforms for the purposes of fraud, the Government, and regulators, will not hesitate to take necessary measures to compel further action. I am on common ground with the noble Lord, Lord Davies, who critiqued the amendment, describing the concern it shows for the intermediary nature of the liability some telecoms platforms would be under. It is a fact that a tech sector reimbursement scheme would undermine the UK’s long-standing intermediary liability regime, which means that platforms are not liable for illegal content posted by users provided they are unaware of the unlawful activity, and which underpins the interactive internet and is a cornerstone of digital innovation. I share his concern that a departure from intermediary liability would leave the UK out of sync with our international partners and potentially threaten growth of the UK’s digital economy.

Therefore, in view of the clear plan we are putting in place to tackle fraud, it is the Government’s assessment that the measures set out in this amendment are not necessary at this time, and I invite the noble Lord to withdraw his amendment.

[Lord Vaux of Harrowden (CB)]

My Lords, I thank every noble Lord who has taken part in this short debate, in particular the noble Baroness, Lady Doocey, and the noble Lord, Lord Young, who both pointed out the question of incentivisation, which is core to this. We need to incentivise the people who are facilitating or enabling fraud, or enabling the fraudsters to make contact with the victims, to do the right thing.