The UK government has announced it is banning cold calling on all financial products as part of a campaign to tackle fraud.
This comes over four years after the UK signed into force a statutory instrument banning any unsolicited phone calls for direct marketing purposes in relation to occupational or personal pension schemes.
The Fraud Strategy will look to tackle fraud and “take the fight to the scammers and fraudsters”, UK prime minister Rishi Sunak said in a statement on 3 May.
He added: “Fraud now accounts for over 40% of crime. It costs us nearly £7bn ($8.8bn, €8bn) a year and we know these proceeds are funding organised crime and terror. What’s more, new technologies are making these scams easier to do and harder to police.
“It’s time to take the fight to the scammers and fraudsters, and put an end to these crimes which can devastate lives and livelihoods within seconds.
“Our plan will help protect you and your loved ones from these scams and the predators who perpetrate them. The time has come to put the fraudsters out of business. And that’s what I’m determined to do.”
Cold calling
The prime minister announced a range of different measures including the strategy to ban cold calls on all financial products.
This will be done “so that anyone who receives calls trying to sell them products such as crypto currency schemes or insurance will know it’s a scam”.
Dean Butler, managing director for customer at Standard Life, said: “People have a right to know who they are dealing with and cold calling can muddy the waters creating opportunities for fraudsters. Building on the 2019 move to ban pension cold calling and extending it to all financial products has the potential to reduce the scourge of financial fraud which causes a great deal of pain.
“While pension fraud still exists, there is widespread recognition that the cold calling ban was a step in the right direction which ultimately has made people more cautious of unsolicited pension review calls and other tactics previously employed by some fraudsters.”
Tom Selby, head of retirement policy at AJ Bell, said: “Financial scams are a scourge on society and ruin lives, so any move to protect more consumers from different types of fraud is extremely welcome. Governments cannot stop scams altogether, but they can place significant barriers in the way of those intent on committing fraud.
“For this cold-calling crackdown to work we need two things: tightly worded legislation, to ensure nefarious contacts are specifically targeted, and a legitimate threat of enforcement where someone breaks the new rules. The plans also need to go hand-in-hand with greater responsibility being taken by internet giants like Google for paid-for scam adverts, something which the Online Safety Bill can hopefully bring into UK legislation.
“The successful campaign to ban pensions cold-calling in 2019 was never supposed to be just about pensions. We have always warned that the vast majority of fraud takes place outside of pensions, usually in the form of investment ‘opportunities’ that turn out to be at best missold and at worst entirely non-existent.
“The ban on pensions cold-calling therefore needed to be seen as the beginning of a wider effort to tackle scams more generally and beef-up education. The pandemic and the subsequent cost-of-living crisis have both resulted in rising vulnerability in the UK which, depressingly, is like blood in the water to fraudsters. The pandemic in particular has also, understandably, likely meant progress in tackling scams has not been as fast as some would have liked.
“The grim reality is that, even with new rules and tough enforcement, scammers will continue their attempts to plunder people’s hard-earned savings. It is therefore vital, regardless of what the government does, that Brits keep their wits about them and are cautious when they are contacted out of the blue by someone they don’t know about their finances. Much of this is common sense, but it could save you from financial misery.”
Other measures
Also, as part of the Fraud Strategy, the UK government will outlaw so-called “Sim farms”, technical devices that allow criminals to scam texts to thousands of people at the same time and it will work with Ofcom to stop more cases of number ‘spoofing’, where scammers impersonate UK numbers and trick people into thinking they’re speaking to banks, telephone companies or other legitimate businesses.
The government will also launch a new National Fraud Squad led by the National Crime Agency and the City of London Police – backed by 400 new posts. It also said that it will “step up work with international partners and make greater use of the UK’s intelligence community” to identify and disrupt more fraudsters overseas.
Lastly, the UK government will invest £30m in a state-of-the-art reporting centre which will be up and running in 2023, work with tech companies to make it as simple as possible to report fraud online and give banks more time to process payments, to allow suspicious payments to be investigated and stopping people from falling victim to fraudsters.
City of London Police commissioner Angela McLaren said: “We welcome this strategy and the much needed investment to support our collective efforts to tackle fraud. As the national lead force for fraud, we want to do everything in our power, working with law enforcement and private sector partners across the UK, to protect people from this callous crime.”
FOI
Following the announcement that the government has launched a fresh plan to tackle fraud, figures obtained by wealth manager Quilter show that just 29% of pension fraud reports are sent for police investigation on average.
The figures from a freedom of information request demonstrate that over the last eight years less than a third (1,173) of the nearly 4,006 pension fraud reports submitted to Action Fraud were disseminated to local police forces for investigation by the National Fraud Intelligence Bureau (NFIB), which sits alongside Action Fraud.
In some years, the number of pension fraud reports to Action Fraud that were sent to the police for investigation was as low as 6%. However, in 2020 when the pandemic hit it rose to 66%. It is unclear how many of these ended up with a conviction.
According to Action Fraud, some losses can run into the millions, but the average loss to each victim is around £75,000. However, finding an accurate average can prove difficult as many victims are unaware they have fallen victim to a fraud.
Quilter said: “Pension scams are extremely complex, require considerable police resources to investigate, and in many cases are only discovered years after the event. It can often take years of information gathering and investigatory time before the police get to the point of prosecution. This means that Action Fraud and the investigatory agencies are forced to prioritise the cases they believe can lead to a successful criminal justice outcome. For the vast majority of pension scam cases, the chances of reaching this stage are slim.”
In light of difficulties in investigating pension scams, Quilter is today urging government to do more to tackle the threat of scams by making it harder for the criminals to operate and reach potential victims.
To do this, Quilter is pushing the government to make faster progress with the Online Safety Bill, which was due to have already been introduced to parliament but continues to be delayed with numerous amendments.
The creation of this Bill means search engines and social media platforms will have a legally enforceable duty to remove suspected scammers and scam adverts immediately on notification and improve their due diligence process so that it becomes much harder for scammers to market investment products using paid adverts.
‘Get a grip on fraud’
Jon Greer, head of retirement policy at Quilter, said: “Unfortunately, especially during economically difficult times, scammers thrive as hard-working people get their heads turned by too good to be true deals. These figures show that over the past few years, as finances have been stretched, many more scams have had to be passed on to local forces for investigation. This shows why it is important that the government’s new strategy gets a grip on fraud.
“Sadly, because pensions are for the long term it can be years before victims realise they have been scammed and their money has gone. Once they are uncovered pension scams are extremely complex, they can span multiple jurisdictions. This all makes investigating the scams incredibly time consuming and expensive, which is why the police have to prioritise those few cases where they have a chance of success.
“The pension transfer regulations brought in 2021 have had a positive impact on highlighting scams. However, even with those regulations in place scams are still being perpetrated making the Online Safety Bill an important piece of the puzzle.
“Getting retribution for a pension scam can be tricky so we should be going to the root of the problem and that starts with getting the Online Safety Bill over the line. The government continue to risk people losing their life savings while this legislation stalls.”
