Car Insurance Industry: Fraud

Lucy Rigby Excerpts

Wednesday 22nd April 2026 Westminster Hall

[The Economic Secretary to the Treasury (Lucy Rigby)]

It is a pleasure to serve under your chairship, Ms Lewell. I am grateful to the hon. Member for North Shropshire (Helen Morgan) for securing the debate and highlighting the impact that fraud can have and the devious tactics that fraudsters use. She also spoke about the interplay between those issues and the legal profession. I will address the people who run such platforms later on. I also want to thank other Members who contributed to this thoughtful and important debate, including my hon. Friend the Member for Bracknell (Peter Swallow), the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for York Outer (Mr Charters), as well as the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier), and the Liberal Democrat spokesperson, the hon. Member for Honiton and Sidmouth (Richard Foord).

Car insurance is not a luxury; it is a legal requirement. For many businesses and families, it is essential to daily life, whether taking children to school, getting to work or caring for relatives. As has been said, fraud undermines confidence in the motor insurance market. It causes direct harm to consumers and drives up costs across the system. Those costs are ultimately paid by people who do the right thing by driving with insurance, as the hon. Member for Strangford rightly highlighted.

My hon. Friend the Member for Bracknell pointed out that some drivers—far too many, in fact—do not get insurance, but drive regardless, which is a criminal offence. I regret to say that between 2019 and 2024, the cost of claims involving uninsured drivers increased by a huge 37%. As my hon. Friend said, that increases premiums for everyone else. The Government are considering how, in the light of its seriousness, the penalties should be strengthened for that offence. I hope that he can take from what I have just said that the Government take fraud extremely seriously.

Fraud is the largest crime type in the UK. It harms individuals and businesses, as well as costing our economy billions of pounds each year. It is increasingly driven by organised crime and enabled by technology, as hon. Members have highlighted. That is why fraud is a national security priority for this Government, and we will do what we must to protect the public. In honouring our manifesto commitment, the Government published the new and expanded fraud strategy in March, as we have heard. The central focus of the strategy is disruption: denying criminals the ability to commit fraud in the first place by targeting the tools and methods they use to reach victims. That means acting across the system of Government, law enforcement, regulators, financial institutions, technology companies and telecoms providers, because no single organisation can tackle fraud alone.

As part of the strategy, we are investing £31 million in a new online crime centre that will bring together the Government, law enforcement, GCHQ and industry to identify and address the technological enablers of fraud and deliver high-impact interventions. In practice, that means better data and real-time analysis so that we can identify patterns earlier and take faster action. That could mean taking down fraudulent websites, disrupting malicious advertising networks or supporting the freezing of accounts linked to fraud. Alongside that, we have launched a call for evidence on economic crime information sharing. We want to remove barriers that can prevent firms and agencies from acting on intelligence earlier so that suspected scam activity can be identified and stopped before more people are harmed.

Let me turn to paid ad spoofing and fraudulent advertising, which was raised by the hon. Member for North Shropshire. The Government recognise that paid-for advertising is being exploited by criminals to reach potential victims at scale. Spoofed ads are designed to look like they come from trusted brands, insurers, brokers, comparison sites and even public bodies. Those are particularly pernicious examples. As the hon. Member noted, they can be highly convincing. Indeed, to the point made by my hon. Friend the Member for York Outer, they look too good to be true. They can appear at the top of search results and be targeted at people precisely when they are looking for help, as the shadow Economic Secretary explained.

My hon. Friend the Member for York Outer talked about ghost broking. My statistics might well be worse than the ones that he read out, because my understanding is that the Insurance Fraud Bureau thinks that ghost broking increased by 50% in the last two years. Whatever the exact statistic, there is a serious increase in the crime. My hon. Friend also highlighted a troubling example of identity theft and pointed to the links between ghost broking and follow-on activities. The story that he told was hard to hear.

All these things are not just consumer issues, but significant questions of responsibility and liability in the online ecosystem. If criminals can buy their way into prominence through paid advertising, we must ensure that the systems that place and profit from those adverts do not turn a blind eye. That is exactly why the Online Safety Act 2023 places duties on the largest social media platforms to tackle fraudulent adverts on their services. Ofcom is due to consult on those measures later this year. Once implemented, Ofcom will have the power to take robust enforcement action when it finds non-compliance, including fines of up to £18 million or 10% of qualifying worldwide revenue, whichever is greater.

The Government have also launched a new partnership between the Home Office, the Department for Culture, Media and Sport and industry: the online advertising taskforce. The purpose is to strengthen and maximise the adoption of transparency standards across the wider programmatic ecosystem so that bad actors can be identified, disrupted and, when appropriate, prosecuted. That work will report back in early 2027, and the Government have been clear that we will take legislative action within this Parliament if there are not sufficient improvements.

The hon. Member for North Shropshire and the shadow EST referred to claims management companies and legal professionals who associate themselves with such companies, and the links between them and car insurance fraud. The Ministry of Justice leads on elements of that agenda but, in some areas, the Financial Conduct Authority has responsibility. I hope the hon. Member will be reassured by the fact that there is ongoing dialogue on the issue between His Majesty’s Treasury and the MOJ to determine what might be done in this area. I hope she will agree that that addresses some of her important points.

I want to address specifically the link between online fraud and car insurance. Insurance fraud is a serious issue for all the reasons that I have noted, and it has been well covered in this debate. However, it has an interaction with online criminality. The spoofed ads that are used to harvest personal data, misdirect consumers to fake brokers and facilitate scams ultimately feed wider fraud, particularly serious forms of money laundering. The Government are working closely with the industry, regulators and consumer groups to close the gaps that criminals exploit. I should add that the FCA is alive to the issue of ghost broking and is looking into it specifically.

In October 2024, the Home Office launched the insurance fraud charter with key insurance firms to reduce insurance fraud. The charter supports stronger collaboration and shared action to prevent, detect and disrupt fraud, because the more effectively we tackle fraud at source, the more we protect consumers and the integrity of the market.

More broadly, the Government’s motor insurance taskforce, which published its final report in 2025, included actions for regulators, industry and the Government to tackle fraud, given the unfortunate role that fraudulent activity plays in increasing claim costs and, in turn, premiums for all consumers.

It is also important to be clear about the wider framework that supports this work. Financial institutions are required to maintain robust systems and controls to detect and prevent financial crime under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Banks must report certain suspicious activity to the National Crime Agency under the Proceeds of Crime Act 2002, and they may also freeze and block accounts if suspicious activity is detected. We have also recently introduced new rules allowing banks to delay and investigate suspicious payments for up to 72 hours, which supports the interception of suspicious payments, giving firms more time to prevent funds from reaching fraudsters in complex cases and helping to break the spell that fraudsters have over victims. As we have set out in the fraud strategy, we are reinforcing the system-wide response through the Online Crime Centre and improved information sharing so that suspected scam accounts can be spotted sooner and action taken more quickly.

I do not pretend that tackling fraud is simple. Fraudsters adapt quickly, and technology, including some of the technology that we have been talking about today, moves very fast, but the direction of travel is very clear. We are shifting from a reactive model, picking up the pieces after harm occurs, to a disruption model that targets the infrastructure that criminals rely on, including the online advertising routes they use to reach victims.

Through our fraud strategy, the Online Crime Centre, strong action on fraudulent advertising via the Online Safety Act, and further work through the online advertising taskforce, backed by a clear commitment to legislate if necessary, we are taking decisive action to protect the public and disrupt the criminals behind these crimes.

I thank the hon. Member for North Shropshire again for raising these important issues. I reiterate that the Government recognise the importance of car insurance to people’s lives and livelihoods, and we are determined to tackle the fraud that drives up costs for honest motorists.