Financial Fraud: Vulnerable People

Lord Davies of Brixton Excerpts

Thursday 2nd December 2021 Grand Committee

[Lord Davies of Brixton (Lab)]

My Lords, I really came to this debate as a spectator, because I wanted to hear the Government’s response to the excellent issues raised by the noble Lord, Lord Sharkey. However, there is one aspect of the way the issue was posed which gave me pause for thought. The way in which it has been framed makes me think that there is a wider issue involved.

The problems of financial fraud affect everyone, in the sense that the noble Lord reflected in his Question. I truly believe that we are all vulnerable. Characterising a subset of people as vulnerable implies that maybe the rest do not need to worry, but in one way or another, at some stage of our lives, we are all vulnerable. Those of us who have an arrogant view of our own capabilities are probably even more vulnerable than those who know their weaknesses.

Whatever is done in this area has to be part of a wider assessment of what the Government can do to provide protection. What leads on from that is that taking action on fraud is too late; action is required before the fraud takes place. The problem we have is that the system is a commercial one, in which a lot of money is involved. It is hardly surprising that fraud and crime will occur; crime goes to where the money is. We have a systemic problem of fraud; it is part of the natural operation of the system that it will arise, so action really needs to be taken much more down the line than after the event, when people suffer. It is at the early stage where the most effective action could or should be taken.

Of course, we have to talk in this context about online fraud, and we look forward to debates on the online safety Bill. The situation has been worsened by the pandemic, with our reliance on online means of communication and commerce increasing, so the opportunities for fraud have increased with it. My own interest is almost inevitably in pension fraud, which is the area that I am most familiar with. It is clear that an awful lot of fraud that occurs in this area is unreported, because people do not know or do not find out until it is too late—or they do know, but they are ashamed and feel foolish. I am not as familiar with other areas of financial fraud, but my assumption is that it is broadly the same there.

The issue raised by the noble Lord, Lord Sharkey, on the plethora of regulators is one that I very much hope that the Government will address. I am really here to hear the response from the Minister, which I look forward to with some interest.