On 5 September 2019, the FCA published a speech given by Charles Randell, FCA Chair, on the fight against skimmers and scammers. In his speech Mr Randell raises some questions about the system for combatting investment fraud, from the point of view of the FCA, one of the many bodies with a role within such system.
The questions that Mr Randell raises include:
- Should policymakers integrate plans to combat scamming and skimming in all new savings and investment policies? Mr Randell states that policymakers need to reflect on previous lessons learnt such as how the pension freedom scheme was exploited by scammers. This will require major changes in policy to have a substantial period of planning and testing to ensure the necessary safeguards are in place to protect against skimming and scamming before the policy is launched;
- How can we reduce the risk of confusion about what’s regulated and protected and what isn’t? Mr Randell suggests that the financial promotions regime is ripe for re-examination. Unless the issue or approval of financial promotions is made a regulated activity with only appropriately qualified and governed authorised firms permitted to do this, with clear standards for issue or approval of the promotion, and with adequate reporting to and supervision by the FCA, Mr Randell is not confident that the financial promotions regime can provide much better protection than it does at present – which is not enough; and
- How can we make the corporate enablers play their part? Mr Randell comments that financial firms reasonably question why they need to pick up the bill for fraud in the system when it would not be possible without data breaches and other actions by firms outside the financial sector. As a minimum, Mr Randell expects big tech companies to take down suspected fraudulent content immediately when requested to do so by the authorities. They should also use their extraordinary resources to work with law enforcement and regulators to develop algorithms and machine learning tools to identify potentially fraudulent content.
On a final point related to the final question he poses, Mr Randell notes the Government’s recent white paper that raises the need for more action to prevent a range of online harms does not include online financial scams despite their devastating impact on consumers. He argues that the policy on online harms should be extended.