The UK Government has proclaimed a “fundamental shift” in its approach to tackling fraud, a problem that accounts for 40% of all recorded criminality in the UK. With the launch of the Home Office’s Fraud Strategy this week, entitled “Stopping Scams and Protecting the Public” (the Strategy) the Government is seeking to hit back at criticism that it has under-resourced and under-prioritised an area that is causing increasing public concern whilst currently accounting for only 1% of police resources.
In tandem with a number of the Government’s other recent announcements, including the Economic Crime and Corporate Transparency Bill and the Economic Crime Plan 2, the Strategy aims to reduce incidents of fraud by 10% by the end of this Parliament. This target is more ambitious than it seems, as it is using 2019 as the benchmark – the year before the Covid-19 pandemic precipitated a significant increase in consumer fraud. However, given the sheer scale of the rising problem - the Economic Crime Plan 2 notes that fraud costs the UK at least £190bn pounds annually, equivalent to 11 times the UK’s entire annual policing budget – such a target is simultaneously both difficult to achieve and fundamentally insufficient.
Noting the detrimental impact of fraud to the economy, businesses and families as well as the tendency for fraud to act as a key funding source for other serious crimes, the Home Office has set out three key pillars which inform the strategy:
- Pillar 1 – pursue fraudsters;
- Pillar 2 – block fraudsters; and
- Pillar 3 – empower the public.
Pillar 1 – Pursue fraudsters
The headline announcement under Pillar 1 is the establishment of a National Fraud Squad (NFS) with 400 specialist investigators, which the Strategy emphasises will be new hires. The NFS will be jointly led by the National Crime Agency and the City of London Police and work alongside the Serious Fraud Office to address both complicated fraud cases and the wider fraud networks.
The Strategy also announces a new unit within the UK Intelligence Community focusing on fraud internationally.
Replacing Action Fraud with a new £30m “state of the art” reporting system is another of the Strategy’s main announcements. The Strategy argues that the with greater access to data and advanced analytic capabilities, the new reporting system will help reverse the trend of rising response times to reports of fraud by the public and businesses.
Notably, however, the Government has not gone further and centralised responsibility for fraud across UK enforcement into a single body, as some advocacy groups have been calling for. Under its current multi-agency approach, the UK currently has 19 separate Government departments and 42 police forces with separate obligations for tackling fraud.
Pillar 2 – Block fraudsters
The second pillar of the Strategy focuses on legal prohibitions to stop low-level fraudsters; banning cold calls on all financial products and prohibiting the use of SIM farms. Whilst we await the legislative detail on such measures, such legal tweaks may make an impact at the margins, but expectations of any significant impact come up against the reality that fraud is already a criminal offence.
Similarly, whilst studies have shown that the vast majority of fraud now occurs on tech platforms such as social media, the Strategy proposes only “voluntary agreements” between industry and Government, the contents of which are widely drawn to include “specific projects, pilots, policy reviews and research”. These suggestions appear to be a rowing back from previous suggestions by ministers of making the technology sector liable for reimbursing fraud victims.
Pillar 3 – Empower the public
The third and final pillar takes up a relatively small part of the strategy, seeking to provide information around support for individual victims of fraud, including reimbursement of defrauded money and support to prevent re-victimisation.
In summary, the Strategy appears to be less of a “fundamental shift” and more of an evolution of the Government’s recent efforts to tackle a problem that has been getting progressively worse. Whilst the increased focus on the issue, the announcement of new investigators and the changes to the reporting system are all promising steps, there is still a significant gap between the scale of the challenge posed by fraud and the resources that the Government is willing to commit to tackling it. Plans, strategies and promises of funding denominated in the tens of millions will continue to struggle against a formidable, £190bn challenge.