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National Fraud Squad to crack down on financial fraud

Fraud is now the most common crime committed in England and Wales, with 1 in 15 people falling victim to fraudsters and 9 in 10 internet users encountering online scams.

Financial fraud can have a devastating impact on people’s lives, with bank accounts and life savings drained in a matter of minutes – fraud victims lost a collective £2.35 billion in 2021.

It can also be costly for businesses, with 18%
falling victim in 2017–2020, and UK Finance members from the banking and finance industry losing over £1.3 billion to fraud in 2021.

To tackle the growing threat of fraud in the UK, the government has announced a new initiative – ‘Fraud Strategy: Stopping scams and protecting the public’.

What is the Home Office’s new Fraud Strategy?

The updated Fraud Strategy published by the Home Office introduces the launch of a new National Fraud Squad (NFS), which will overhaul the way fraud is investigated.

Despite fraud accounting for over 40% of all crime in England and Wales, barely 1% of police resources is used for dealing with fraud and supporting victims.

To counter this, the NFS will use a specialist team of 400 investigators working with the UK intelligence community and local forces to shut down criminal fraud cells.

The anti-fraud strategy involves several measures to prevent fraudsters from exploiting people, including bans on telecom network abuse and cold calling.

Working with Ofcom to stop telecom network abuse

Many fraud scams begin with unsolicited phone calls and text messages, with scammers pretending to be a trustworthy individual or organisation with authority.

Working with the telecommunications regulator Ofcom, the government will disrupt telephone scams by making it harder to ‘spoof’ numbers, which allows fraudsters to impersonate legitimate UK phone numbers or businesses and trick people into answering.

SIM farms, devices which can hold hundreds of SIM cards and send thousands of text messages in seconds, will also be banned. The government will be reviewing the use of mass text aggregators that facilitate sending messages in bulk, potentially requiring registration to use them legitimately.

Banning cold calls for investment products

Under the Financial Guidance and Claims Act 2018, there is currently already a ban on cold calls from pension providers and personal injury firms unless the consumer has already agreed explicitly to be contacted by the company.

There are now plans to extend this ban to cover all investment and financial products completely, preventing scammers from cold-calling and talking victims into purchasing fake investments or products they will never receive.

Banning cold calls related to all financial products and making the public aware of this change means that if people receive such a call, they’ll know it’s a scam and hang up.

Providing more protection for victims of fraud

Victims being able to get their money back as soon as possible is a major concern when dealing with financial fraud. If your bank card was stolen, your bank would legally have to reimburse you for any money stolen within 48 hours – but if you were tricked into authorising a transaction, you currently would not be eligible for this protection.

The Financial Services and Markets Bill, which is making its way through Parliament, will introduce powers to make payment service providers (PSPs) treat customers fairly and reimburse victims of ‘authorised’ fraud, too.

Banks will be allowed to delay processing payments for longer to investigate suspicious transactions, preventing victims from unknowingly handing over their money. A new framework will also be created to ensure repatriation of funds.

Replacing Action Fraud with an updated system

For many victims, it’s difficult to know how to report fraud or how to recover what’s been stolen from them. Some struggle to recognise fraud even after experiencing it before, with 18% of adult victims being re-victimised and falling for further scams.

To improve communications about protecting yourself against fraud and how to report it, the government plans to replace the Action Fraud service with a state-of-the-art system for reporting fraud and cybercrimes within the next year.

Around £30 million will be invested in this simpler system, which should provide shorter waiting times and an accessible online portal for victims to check the progress of their case. The National Economic Crime Victim Care Unit (NECVCU) will also be expanded to provide tailored local support to victims across England and Wales.

Regulating the tech sector through the Online Safety Bill

The Online Safety Bill, which is currently progressing through the House of Lords, will put more pressure on the technology sector to enforce extra protections and penalties, keeping their customers safe and punishing those who enable fraud.

Regardless of which online platform you’re using, you should be able to easily report a fraud or scam within a few clicks – not just for adverts, but also for false endorsements, identity fraud, and other kinds of online content.

The government will incentivize tech companies to combat fraud on their platforms by publishing transparent reports on fraud levels, showing which are the safest to use and which aren’t, in addition to fining those who fail to protect their customers against fraud.

Watch out for financial fraud

Fraud can involve a variety of dishonest acts with the intent of gaining money or property through deception, but technological advances have given criminals so much more access to personal data that identity theft and financial fraud are almost too easy.

The Home Office’s strategic crackdown on popular fraud methods is overdue, but these proposals will take time to move through Parliament and become enforceable legislation – giving fraudsters more time to get creative and target more victims.

Until the Fraud Strategy comes to fruition, the one piece of advice you can rely on is that if you answer an unsolicited phone call from your bank, the police, or anybody else, you should tell them that you’ll call them back on the official phone number. A scammer pretending to be the trusted source will try to stop you from doing this, while genuine callers won’t.

Another way to help prevent fraud, especially for businesses, is to outsource accounts to an accredited accountancy firm. With our Barnsley accountants managing your books, it’ll be harder for fraudulent transactions to slip by unrecognised.