The UK government has faced criticism from MPs regarding its “slow progress” in tackling fraud. A report from the Public Accounts Committee (PAC), a group of cross-party MPs, published at the end of March demands that the government makes its fraud strategy public after being delayed for five months.
In its report, Progress combatting fraud, PAC scrutinises the UK’s Home Office’s lack of progress in tackling fraud since it originally called for urgent action in 2017. According to the publication, June 2022 saw 3.8 million incidents of actual or attempted fraud, which was an increase of 12% since March 2017, but says that charges and summonses have fallen.
The solicitor general, Michael Tomlinson, told the House of Commons in March 2023 that the Crown Prosecution Service (CPS) prosecuted more than 6,000 defendants where fraud and forgery were the principal offence in 2022. The conviction rate was over 80%.
“Fraud can have a significant detrimental impact on people’s lives, causing serious psychological harm for victims as well as financial losses,” the report says, chastising the government for not providing reliable and updated data on the cost of fraud to individuals and businesses. It has made seven recommendations to the government and is awaiting its response.
Since the publication of the report, the government has continued to push through its Economic Crime and Corporate Transparency Bill, which looks to target fraud and money laundering. The Home Office says that the bill will bring reforms to Companies House and prevention of the abuse of limited partnerships, as well as give businesses more confidence to share information to tackle economic crime. New “intelligence gathering powers for law enforcement” will also mean the removal of burdens on businesses.
According to the most recent impact assessment, implementation of the bill will cost the taxpayer an estimated more than £439m in the first year, with estimated ongoing costs expected to be up to £61m per year. Large organisations affected by the bill could be set back £98.5m per year for failing to prevent fraud.
Fraud causes havoc for businesses and consumers but it isn’t treated as a priority
Fraud accounts for 41% of all crimes committed in England and Wales and is considered the crime most affecting the public.
Between 1 February and 1 March 2023, the National Fraud Intelligence Bureau (NFIB) received 30,915 reports from Action Fraud, amounting to £199.2m in reported losses. Consumer fraud was the most prevalent, with around 11,500 recorded. Limited companies were the most targeted in the category of ‘organisational victims’.
However, PAC reported that victims of fraud crimes were being failed by Action Fraud, which is run by City of London Police: “Many victims feel lost in the system as there is often no response when they make a report to Action Fraud.”
More than 900,000 reports are sent to Action Fraud per year from consumers, businesses and industry. However, fewer than 1% of cases result in an offender being charged or prosecuted for the crime. PAC says that this has resulted in the reporting tool being dubbed “Inaction Fraud.”
While a new system is reportedly in the works, it is not planned to be in place until 2024. PAC has recommended that the Home Office set out how the replacement will “improve the way it engages with victims of fraud and updates them about their case” as well as any improvement plans for the interim.
Home Office still ‘reliant on voluntary action’ from tech and telecoms industries in dealing with fraud
PAC also lambasts the government for relying on “voluntary charters” to incentivise sectors such as technology, telecoms and banking to deal with fraud arising from spam and phishing campaigns. At the moment, there is no mandatory reimbursement for consumers targeted by fraudsters.
“Industry sectors, such as banking, technology and telecoms, have a vital role to play in designing out opportunities for committing fraud,” says the committee. “However, not enough has changed since we last looked at this five years ago.”
It reports that only around 50% of victims of authorised push payment fraud get their money back and puts the blame squarely on inconsistencies arising from voluntary reimbursement from sectors.
“It is possible to secure impacts through voluntary charters,” PAC explains. “For example, the Department asserts that persuading telecoms companies to block scam texts sources led to more than a 90% reduction on some operators.”
Where is the government’s fraud strategy?
A recurrent issue that is cited by MPs in and out of PAC is that the Government’s Fraud Strategy has yet to be published.
Ahead of the PAC report being published, shadow attorney general Emily Thornberry asked the solicitor general in March 2023 for an estimated delivery date for the strategy but was not provided with one.
“Every day that passes, more lives are destroyed by fraud. We urgently need a Government who understands the scale of that crisis and has a plan to tackle it,” she told Tomlinson. “Five months ago, the prime minister [Rishi Sunak] stood at the Dispatch Box and told us that ‘the Government will shortly publish our fraud strategy…’ The solicitor general has told us again today that the strategy will come shortly.
“Do the Government have a different concept of time? What do they mean by “shortly”, and how much longer are we going to need to wait – or is this just another example of the Government making big promises on crucial issues and delivering absolutely nothing?” she asked.
Tomlinson responded that “the Fraud Strategy will be published”.
Separately, a Home Office spokesperson told Tech Monitor: “This government is absolutely committed to cracking down on fraud and we continue to intensively work with partners across government, law enforcement and industry to protect the public.
“We have committed £400m over the next three years to bolster law enforcement’s response to economic crime, and have introduced the Online Safety Bill and the Financial Services and Markets Bill to block fraud at the source and improve the reimbursement of victims.
“To drive the system we will shortly publish our Fraud Strategy. This sets out a coordinated response from government, law enforcement and the private sector to better protect the public and increase the disruption and prosecution of fraudsters.”
The oppositional party, Labour, has proposed a total ban on number spoofing from overseas in a bid to combat fraud. According to the Guardian, Labour is anticipating pushback from industries that rely on call centres in countries such as India but pushed Ofcom to create a register of exceptions.