Financial Fraud: Vulnerable People

Lord Rosser Excerpts

Thursday 2nd December 2021 Grand Committee

[Lord Rosser (Lab)]

I too thank the noble Lord, Lord Sharkey, for securing this debate. I am afraid I will be repeating some of the figures that have been quoted, but most of my comments will be directed to what has or has not happened as far as the Government are concerned during the period of the pandemic.

As the noble Lord, Lord Sharkey, said, the Crown Prosecution Service has said that fraud is now the most commonly experienced crime in England and Wales. Using data from the crime survey for England and Wales, the Office for National Statistics reported that there were 5 million fraud offences in the year ending June 2021, and that this represented a 32% increase compared with the previous year. There were large rises in consumer and retail fraud, advance fee fraud and fraud that just comes under the category of “other fraud”.

In contrast, the ONS highlighted that crimes such as theft and robbery saw falls during periods of lockdown. It said that the data may show

“fraudsters taking advantage of behaviour changes related to the pandemic”,

such as increased online shopping and increased savings. Some 26% of offences resulted in the loss of money or property with no or only partial reimbursement. The National Fraud Intelligence Bureau reported a 36% rise in fraud offences in the year ending June 2021 compared with the previous year, which included a 34% increase in online shopping and auction fraud and a 51% increase in financial investment fraud.

Some people are of course more at risk of becoming a victim of financial fraud—for example, individuals with a mental health problem or dementia. People who have experienced mental health problems are three times more likely than the rest of the population—23% versus 8%—to have been a victim of an online scam. Age UK has highlighted the impact of fraud on older people in England and Wales and, based on an analysis of Crime Survey for England and Wales data between 2017 and 2019, has said that an older person becomes a victim of fraud every 40 seconds. Age UK has said that alongside financial losses, becoming a victim can also

“seriously affect quality of life and wellbeing”,

with many people experiencing a deep sense of shame, embarrassment, anxiety and loss of independence following a scam—and that of course often leads to non-reporting.

The people engaged in such financial fraud pray on us all, as has been said, but particularly on the vulnerable. It is a premeditated, carefully planned, well-resourced and systematic activity, with those involved knowing precisely what a devastating impact they are having on their victims. They deserve everything they get and more, if and when—and it is not often enough—they are brought to justice.

I have no doubt that in their response the Government will talk about the draft Online Safety Bill, the fraud action plan, the relaunch of the Joint Fraud Taskforce and an apparent government intention to legislate to allow the Payment Systems Regulator to make reimbursement mandatory where a personal or business is tricked into sending money to a fraudster posing as a genuine payee. However, the extent to which proposed legislation, plans and taskforces will address and reduce all the different types of financial fraud and the different ways and channels through which they are perpetrated, as well as providing full financial protection for victims, remains to be seen.

I hope that in their response the Government will set out the specific targets for reducing financial fraud and protecting victims financially, which the various measures that I have no doubt we will hear about in their response are expected to deliver. Certainly to date the Government’s efforts to address rising levels of fraud, not least online fraud, have been woefully inadequate, particularly during the current pandemic. Reductions in police personnel during the last decade have only made matters worse.

I tabled a Written Question in May last year asking the Government

“whether they have broadcast advertisements to warn the public, in particular those who are vulnerable, of scams related to the Covid-19 pandemic; if not, why not; and what plans they have to provide advice about how to avoid becoming a victim of such scams.”

The Written Answer—not from the Home Office—said:

“The government has not broadcast advertisements to specifically raise awareness of scams related to the Covid-19 pandemic.”


The reply went on to say:

“HMG believes the best way to ensure the public’s safety is to make sure that they know how to protect themselves … so that the public know how to spot a scam and protect themselves from them.”


The reply continued:

“We have recently launched a GOV.UK page on coronavirus related fraud and cybercrime including easy-to-follow steps for people to better protect themselves as well as signposting all relevant advice and tips.”


For this Government, too often a GOV.UK page is the remedy to all problems.

I thought at the time that that reply reflected a fair degree of complacency. Now, though, we can ask the question: has the Government’s strategy for protecting the public, particularly those who are vulnerable, from scams during the pandemic been successful? The figures that I have already quoted suggest otherwise.

In addition, according to UK Finance, the public were conned out of £753.9 million in the first six months of this year alone, up 30% on the same period in 2020. The banks have already warned that the period up to Christmas and new year is likely to be the “busiest ever” for criminals looking to trap unsuspecting victims as the pandemic has pushed shoppers online.

It is of course a matter for the Government what they say in their response. But I hope that, if they are going to tell us what they intend and plan to do, and how much money they have spent and will spend, they will also answer the question: why was more effective action not taken to warn the public and particularly vulnerable people of the increased danger of financial fraud from scams and fraudsters during the Covid-19 pandemic? I do not wish to suggest for a single moment that broadcasting advertisements raising awareness of scams during the pandemic—which is what I asked about in my question—would have been the answer to all the problems that have materialised; clearly, it would not. But the Government’s approach has been very complacent and, frankly, it is many members of the public, including the most vulnerable, who have paid the price during the Covid pandemic, both metaphorically and literally.

[The Minister of State, Home Office (Baroness Williams of Trafford) (Con)]

My Lords, I add my thanks and congratulations to the noble Lord, Lord Sharkey, for securing this very important debate and for all the very valuable points he has raised. I of course agree that we should protect people from fraud, particularly vulnerable people who are often targeted by callous and ruthless criminals. As he said, fraud is now the most common crime type in the country, accounting for some 40% of offences in the year ending June 2021, according to the Crime Survey for England and Wales. It is estimated there were 3.9 million victims of fraud in the same period.

As the noble Lords, Lord Vaux and Lord Davies of Brixton, said, we are all vulnerable to it. I almost became a victim of it a couple of weeks ago. It was not obvious that I was being scammed at first glance, but it nearly happened to me. Of course, the impact extends beyond financial losses. As the noble Lords, Lord Rosser and Lord Sharkey, said, the emotional and long-lasting harm that people can suffer is horrendous. Fraudsters can be very sophisticated and will exploit any means they can to trick innocent people out of their hard-earned money.

The noble Lord, Lord Rosser, is absolutely right to point out the vulnerabilities during Covid, with so many people at home online, as opposed to out and about. For those who are very vulnerable, those impacts can be felt all the more, so we are focused on stopping unscrupulous fraudsters in their tracks and supporting victims so they can recover and protect themselves in future.

We are aiming to step up the whole-system response to fraud, which is the right way. While it is vital that we crack down on criminals behind scams, fixing the law enforcement response is just one part of the solution, as noble Lords have pointed out during today’s debate. To disrupt organised criminals and safeguard the most vulnerable, we need to prevent it from happening in the first place, as noble Lords have said. But we cannot, as government, do it alone. That is why the Home Office is working across government, law enforcement and the private sector—the private sector is really important in this—to better protect the public, reduce the impact on victims and ensure fraudsters are brought to justice.

To improve our collective response, we are leading work on the development of a comprehensive fraud action plan, which the noble Lord, Lord Rosser, knew I would mention, and we will it publish early next year. This will commit key partners in the public and private sectors to do more to tackle fraud. The plan will focus on public engagement to ensure that everyone, including those most at risk, understands the threat and therefore how best to protect themselves.

We know that those most vulnerable to fraud can become repeat victims—that is the horror of this. Despicably, they are placed on what is called a “suckers list” that is then sold on by ruthless fraudsters. It is essential that we improve victim support and make sure that everyone gets the information and help they need to protect themselves.

That is why we as the Home Office are working with the City of London Police to deliver a nationwide rollout of the National Economic Crime Victim Care Unit. It provides an important additional layer of support for people who report a fraud or cybercrime to Action Fraud—on which, more later—where their cases are not investigated by local police, and helps prevent repeat victimisation. The unit is currently supporting 20 forces, with a further rollout planned. As of October this year, it has helped support more than 160,000 victims, and since the start of this year has assisted in recovering almost £1.5 million that people had lost.

It is also very important that we bolster the local support available to vulnerable victims. To do that, the Home Office is supporting National Trading Standards in the rollout of fraud multiagency safeguarding hubs in England and Wales. These local hubs will improve the quality of care for fraud victims by bringing together multiple agencies that can work together to support them, making it easier for victims to navigate their way to getting the help they need. The national rollout follows a successful pilot in Lincolnshire and North Yorkshire during which more than £8 million was saved for individuals and society.

We continue to work extensively with the private sector effectively to “design out” fraud and stop vulnerable people being targeted in the first place. In October, we published three voluntary charters with the retail banking, telecommunications and accountancy sectors. These are partnership agreements to find innovative solutions that will drive down the level of fraud. New initiatives include: a pilot dynamic direct debit system that would introduce a banking authorisation step in applications for new telecommunications contracts, including mobile phone contracts, that have been applied for fraudulently or used for fraudulent purposes; a cross-sector plan to protect customers who have been subject to a data breach from becoming victims of fraud; and leveraging new technology to tackle the fraudulent practice of sending fake company text messages, known as “smishing”.

The progress of these charters will be closely monitored by the Joint Fraud Taskforce, mentioned by the noble Lord, Lord Sharkey, which is chaired by the Security Minister and brings together senior partners from across the public and private sectors. We also intend to develop a suite of charters with other sectors that have a role to play in protecting vulnerable people from fraud, including tech and social media firms.

The noble Lord, Lord Sharkey, and others talked about the harms of the online world. The online safety Bill will provide further protection against fraud. Companies in scope will be required to take action to tackle fraud where it is facilitated through user-generated content. We expect this to have a particular impact on frauds such as romance scams, which cause significant psychological harm to victims.

The noble Lord, Lord Vaux, might stop shaking his head when I say to him and the noble Baroness, Lady Kramer, that we are also considering whether to impose tougher regulation on online advertising, because that may well be the gap that he talked about. We have heard the strength of feeling in the House and in the public domain. The Joint Committee on the Bill will report shortly, and we will examine its recommendations on this issue extremely carefully. The Department for Digital, Culture, Media & Sport—the DCMS—will also consult shortly on a range of proposals to tackle harms associated with advertising. It may have been the noble Lord, Lord Sharkey, or the noble Lord, Lord Vaux, who commented on Google versus Facebook/Meta. I commend Google for what it has achieved. As for discussions with Facebook, I have lost count of the number of discussions that I have had. One thing that we said way back in the day was, “Look, if you don’t sort some of these problems out, we’re going to legislate to sort them out”—and this is where we are now.

On scam calls, as part of our response to fraud the Government are working with the telecommunications industry to tackle telephone-enabled fraud and break the business model of the criminals behind it. Through our joint telecommunications sector charter, providers have agreed a nine-point action plan to tackle fraud through scam calls. This includes commitments to identify and implement techniques to block scam calls and smishing texts. To protect those most vulnerable to telephone scams, DCMS provided £1 million over three years to National Trading Standards to fund the rollout of call-blocking devices to people across the UK. These help those most in need and provide 99% protection from nuisance and scam calls.

On phishing and smishing, we have been working to reduce the threat of phishing emails that can reach the most vulnerable. Last year the National Cyber Security Centre launched its suspicious email reporting service, which of course I encourage the public to use via [e-mail].

The noble Lords, Lord Sharkey and Lord Vaux, both mentioned APP scams, authorised push-payment fraud, where victims are tricked into handing over their money. This targets the most vulnerable with increasingly sophisticated scams that can have such a devastating impact on their lives. The Government are clear that the public should not be left out of pocket through no fault of their own. We have been working with the financial services industry to help tackle APP fraud, including through the implementation of initiatives such as Confirmation of Payee and the creation of the contingent reimbursement model code. Most high-street banks have now signed up to this voluntary code, which was designed to offer increased protection to the most vulnerable. Victims who use these banks will be entitled to reimbursement when they have taken the required steps to protect themselves, or if it is not reasonable to expect them to do so.

We really welcome the work that the industry has undertaken to date, including through this code, but it has clear limitations, including disparity in how different banks are interpreting their obligations and the fact that it does not cover all providers. As such, the Government are now engaging with the Payment Systems Regulator, the PSR, and industry on what more can be done to better protect customers. We welcome the PSR’s recent consultation on APP scams, which set out potential measures to reduce their impact, including mandatory reimbursement of victims. We now intend to legislate to address any barriers to mandatory reimbursement when parliamentary time allows.

Faster Payments, the UK’s real-time low-value interbank payments system, has been a great UK success story. In 2008 the UK was one of the first countries to launch a 24/7 real-time payments system, which now processes more than 3 billion payments a year. However, despite the speed and resilience it offers, banks already intervene in a variety of ways when they suspect fraud, including delaying the processing of payments and contacting customers. At this point I must give a shout-out to my bank, Lloyds, which has done that to me before.

On law enforcement and action fraud, we continue to work closely with law enforcement in line with recommendations from Her Majesty’s Inspectorate of Constabulary and Fire & Rescue Services. This includes working with City of London Police on a refresh and upgrade of the current action fraud service to improve victim experience and the law enforcement response.

To the question from the noble Lord, Lord Sharkey, on the contract, as I said, we are working on plans to refresh and upgrade the current action fraud service, and the competition to find a new commercial partner to deliver that service was launched in July this year. We expect the service to be improved in both usability and effectiveness, which noble Lords have pointed to. Also since last year, City of London Police have increased the number of staff in their call centre, and recent performance data has been quite encouraging, suggesting that between 94% and 98% of victims were satisfied with their service.

The noble Baroness, Lady Kramer, made a point about the FCA. HM Treasury continues to work closely with the FCA to ensure that its duties and powers are sufficient to meet the threats in the financial sector. When I thought about this debate and saw the noble Baroness’s name, I thought, “She’s going to ask about whistleblowing—but in what capacity?” This year, the FCA launched its In Confidence, With Confidence campaign to encourage individuals working in financial services to report potential wrongdoing to the FCA, reminding them of the confidentiality that is in place. I totally agree with her on her point about non-disclosure agreements; that is one that we have discussed before.

Finally, on pension fraud, it is totally unacceptable and devastating that anyone should be cheated out of their savings and their plans for retirement. The Government are absolutely committed to protecting people from pension scams and pursuing those who perpetuate them. In the last two years, we have introduced a ban on pensions cold-calling and changes to the pension scheme registration process to stop fraudsters exploiting pensioners. The inclusion on fraud in the scope of the online safety Bill will also have a strong impact on preventing investment frauds.

I think that I have responded to all the points; if I have not, I shall write to noble Lords. I thank the noble Lord, Lord Sharkey, once more for securing this important debate, and thank the not too many noble Lords who have taken part, because I think that has made it an effective discussion.

[Lord Rosser (Lab)]

The Minister said that she would respond to any questions that she had not replied to. Will that include my question: do the Government really think that they did enough to protect vulnerable people during the pandemic, bearing in mind the substantial increase in the number of fraud cases?

[Baroness Williams of Trafford (Con)]

I most certainly will get back to the noble Lord, Lord Rosser, on those statistics, and any facts and figures I have for him for during that period, because it must have been a very vulnerable time for an awful lot of people.