Pimfa has renewed its call for the Financial Conduct Authority to have a greater role in combating fraud, in response to a call for evidence from the Home Affairs Committee.
The HAC has just closed its evidence-gathering inquiry into fraud, following the Home Office launching its fraud strategy in May this year.
According to the committee, fraud is the most common crime, accounting for more than 40 per cent of all offences in England and Wales.
But while the focus on fraud is laudable, Pimfa said more needed to be done, adding it was vital that the financial services regulator had a bigger role to play.
Alexandra Roberts, head of regulatory policy and compliance at Pimfa, said: “The current focus on fraud by policymakers is welcome, as is the government’s commitment to reducing fraud by 10 per cent by 2025.
“But we are also concerned whether the additional resources provided will be enough to obtain the required improvement and meet the commitment to reduce fraud. For there to be a difference, we believe significantly more funding is needed.”
This government is absolutely committed to cracking down on scams.government spokespersonIn May 2022, in an evidence session to the parliamentary committee scrutinising the online safety bill, which is shortly to be enacted, Pimfa urged parliamentarians to ensure the FCA has the authority to act over fraudulent user-generated content that appears on social media and search engine platforms.
At the time, the trade body said through the OSB, there would be a ‘duty of care’ on social media websites and search engines in the UK, which is a hugely important principle and a victory for all those who have campaigned over the years for this principle to be established in law.
It will help prevent fraudulent content from appearing on websites and reduce scam adverts and fake celebrity endorsements.
However, such communications will be regulated by Ofcom, according to the OSB.
FCA should provide support
Pimfa argued that the FCA should be allowed to provide strategic support to Ofcom to prevent harm being introduced to financial services consumers and prevent scam adverts swiftly.
Such a partnership between the FCA and Ofcom would ensure that Ofcom has the expertise to identify breaches, making the online safety bill more effective in preventing fraud, it explained.
But the FCA said it is continuing to use the ScamSmart campaign to inform the public on how to avoid scams and recently introduced new screening checks for firms approving financial adverts so people can save, invest and borrow with confidence.
The FCA also recently announced an overhaul of social media guidance to combat illegal and non-compliant promotions.
It is working closely with tech platforms to ensure preventing illegal and fraudulent promotions remain a priority.
Google, Bing, Meta, Twitter and TikTok have all changed their policies to permit only-FCA authorised firms to market financial services, including investments.
A spokesperson for the FCA said: “We scan thousands of websites a day to protect consumers and will act swiftly to put a stop to scam advertising.
“We have been working closely with Ofcom to develop guidance for the online safety bill to ensure social media companies are held to account for any breaches of financial promotions rules on their platforms.”
Government’s role
Pimfa said it has also repeatedly urged the government to provide more funding and resources to Ofcom so that it will be able to regulate social media platforms and search engines effectively under the new powers given it by the online safety bill.
“In order to eradicate fraud, Pimfa believes there must be a role for the FCA in helping to identify instances of fraud that introduce obvious harm to financial services consumers, a more centralised approach to combatting fraud and much more international cooperation,” Roberts said.
“We would urge policymakers to support such proposals and will continue to work with regulators and the Government to see these reforms come into being.”
Pimfa is also urging the government to create a single body responsible for fraud across the country to ensure a more holistic and organised approach.
It said this would help to resolve the overly complex approach to tackling fraud that currently exists with multiple agencies and government departments holding various responsibilities.
While the recently announced ban on cold calling is welcome, Pimfa also called for much greater international cooperation in combating fraud given its global nature.
A government spokesperson said: “This government is absolutely committed to cracking down on scams and we continue to work intensively with partners to protect the public from fraud.
“Platforms will have to quickly tackle criminal activity once alerted to its presence and will not be allowed to promote it in their algorithms.”
The online safety bill gives Ofcom powers to take enforcement action against companies which do not comply with their new duties and protect users from harm.
“We’re also investing £100mn to create a National Fraud Squad with 400 new officers and are deploying the UK Intelligence Community to relentlessly pursue criminals wherever they are in the world,” the spokesperson added.
sonia.rach@ft.com
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