Plans to ban cold calls for financial products such as sham cryptocurrency schemes, mortgages and insurance have been set out with the launch of a consultation, marking the next step in delivering the government’s Fraud Strategy.
The 8-week consultation, published on 2 August, will cover proposals to ban cold calls offering any financial products to clamp down on fraudsters seeking to trick people into buying fake investments. Once in force, people receiving a cold call offering these types of products will know that it is a scam, and fewer people will become victims.
Fraudulent investment schemes represent a significant threat to the UK economy, consumers, and society, with victims losing £750 million between 2022-23, according to data from the City of London Police.
A specialist team which provides support to victims of fraud, known as the National Economic Crime Victim Care Unit, has also been rolled out to all 43 police forces across England and Wales since the Fraud Strategy was announced.
Part funded by the Home Office, the service has existed as part of City of London Police since 2015, and is estimated to have stopped more than £2.8 million being lost to fraud. Last year its teams supported more than 113,000 victims and its rollout to all police forces will ensure more people receive the help and support they need.
Security Minister Tom Tugendhat said:
“Fighting fraud is at the heart of our campaign to fight crime. The National Economic Crime Victim Care Unit and the cold calling consultation are delivering on our pioneering Fraud Strategy.
Fraud doesn’t just lead to financial loss, it can destroy confidence and lead to severe stress. That’s why it’s so important that victims get the best possible care and support.
The cold calling consultation is an important step forward in our efforts to block fraud at source. It will have a major impact once it is in force.”
Andrew Griffith, Economic Secretary to the Treasury, said:
“Cold calling for financial services and products has long been used by fraudsters to manipulate and trick members of the public into scams. These cold-hearted criminals will often purposely target the most vulnerable and use a range of deceitful tactics to take advantage in any way they can.
We will ban cold calling for all consumer financial services and products, so the public can be sure that it’s not a legitimate firm if they get a call about a financial product out of the blue without their consent.
We want people to feel confident to put the phone down and report these illegitimate calls.”
The government’s Fraud Strategy, published on 3 May, is already turning the tide against fraud.
A key pledge within the strategy is to ensure more victims are reimbursed and recently passed legislation will enable this to happen.
The Financial Services and Markets Act, which received royal assent on 29 June, enables the Payment Systems Regulator to require payment service providers to reimburse a customer if they become a victim of authorised push payment fraud. These are frauds where the victim has been deceived into sending a payment from their bank account to a fraudster. This change will provide greater protection for victims of these frauds.
Improved support to block fraud and protect victims will also be achieved through the Online Advertising Programme, which will deliver tougher measures to tackle harms caused by illegal advertising online, including fraud.
A range of targeted measures will be put together to address the most serious risks linked to online advertising. The government will launch a consultation on the details of the potential legislation in due course.
The online advertising taskforce set up as part of the programme met for first time last week. It brings together tech trade bodies and the Advertising Standards Authority alongside the government’s Anti-Fraud Champion, Anthony Browne. The shared mission is to prevent fraudulent messaging online and stop age-restricted products being marketed to children.
Anti-Fraud Champion Anthony Browne said:
“80% of fraud is cyber-enabled and often starts with scam social media posts, a fraudulent email or false advertising and this makes engaging with the tech sector particularly important.
Our tech sector is among the best in the world and has a proven track record for innovation. It is of the utmost importance that we work with them to bring about better protections for their customers.”
The Economic Crime and Corporate Transparency (ECCT) Bill is also anticipated to receive royal assent later this year. Once in force, it will reform corporate law by creating a new criminal offence, called failure to prevent fraud, which places an onus on all large companies to actively prevent fraud being committed by their staff.
If a member of staff commits fraud, for the benefit of their employer, their employer will be held criminally liable unless they are able to prove they had implemented reasonable measures to deter such offending. The government will publish guidance on these measures in due course.
Each of the reforms proposed by the ECCT Bill strike the right balance between holding businesses accountable for their actions without placing onerous regulatory demands on them.
It will level the corporate playing field by ensuring all companies play by the same rules.