UK’s new Fraud Strategy: more ambition needed

It is no secret that fraud has surged over the last few years. Increased digitalisation, the introduction of faster payments and, of course, the pandemic have combined to create a perfect storm. Throw in what is, at best, a lacklustre law enforcement and it is no surprise that fraud, which makes up over 40 percent of crimes against individuals and is the most common crime in the UK, has increasingly become a government priority.

The new strategy

At the start of May, the UK’s much-delayed new Fraud Strategy was launched to a somewhat muted response. The strategy aims to reduce the 2019 levels of fraud by 10 percent and disrupt 300,000 frauds by the end of this Parliament, through actions across three pillars: pursuing fraudsters, blocking fraud at source and empowering the public.

Taking these pillars in order, the headline grabbing announcement was the creation of a new National Fraud Squad. Staffed by 400 specialist investigators, little detail has been divulged about how the squad will work. Likely more a virtual network of existing parts of the law enforcement ecosystem, it’s also unclear if it will attract new funding. Even so, 400 staff will struggle to make a dent in the scale of the problem (estimated by the National Crime Agency to cost the UK up to £190bn per annum).

There is a commitment in the strategy to review law enforcement structures in due course and decide whether more structural reform is needed. This is welcome but probably needs to happen sooner rather than later; in a report last year, the Justice Committee described the criminal justice response to fraud as ‘disjointed and lacking in an overarching strategy to prevent, investigate, and prosecute these crimes.’

The strategy itself notes that for every 100 frauds committed, there is only one successful prosecution. Therefore, there are a raft of proposals to try and address some of wider issues that are hampering the investigation and prosecution of fraud, particularly serious and complex fraud. These include an end-to-end review of the criminal justice process and a new independent review which will cover, inter alia, the scope of the Fraud Act 2006 and the difficulties associated with disclosure in cases where there is a large volume of digital evidence.

The government has already committed to introducing a new offence of failure to prevent fraud for large companies in the Economic Crime and Corporate Transparency Bill and potential changes to the identification doctrine to make it easier to hold companies to account.

The reality is that a criminal justice response alone is not going to be enough, given resourcing issues and court capacities. Hence, the second pillar of the strategy, which aims to block more frauds from reaching consumers in the first place. This includes a ban on cold calling for all financial products, a ban on SIM farms and other forms of technology that enable mass phishing and smishing communications and more work to prevent number spoofing.

Where the strategy particularly falls down, though, is the lack of any real and effective actions for the tech sector. It is clear that online platforms are major facilitators of fraud: the latest figures from UK Finance suggest that 78 percent of authorised push payment fraud starts online.

Prior to the launch of the strategy, there had been speculation that the government might force tech companies to reimburse victims of fraud, but this was dropped in favour of agreeing some voluntary targets with the sector, the creation of a sector charter with the tech industry and a reliance on the forthcoming Online Safety Bill to deal with fraudulent content.

The third pillar of the new strategy acknowledges that much more needs to be done to develop a clear and consistent public awareness campaign and support victims of fraud, including victims of identity theft. The whole strategy is underpinned by cross-cutting capabilities, including a welcome focus on the importance of data sharing and the need for much greater international cooperation and coordination.

Conclusion

In summary, the Fraud Strategy goes some way to acknowledge the issues which have allowed fraud to flourish in the UK. There is a lot to like and a lot which seems entirely sensible and reasonable. But many of the measures announced will take a while to have any impact and, even then, are unlikely to make a material difference. Without more ambitious and more immediate plans for hardening the UK’s defences against fraud, the criminals are always going to be victorious.

Kathryn Westmore is a senior research fellow at the Centre for Financial Crime and Security at the Royal United Services Institute
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