The UK government recently published its fraud strategy paper: Fraud Strategy: Stopping Scams and Protecting the Public.

The prevalence of fraud in the UK cannot be overstated: victims of fraud reported losing £2.35 billion in 2021 and recent research estimates fraud losses in 2021 equate to some £137 billion. The new fraud strategy has three principal overarching objectives: “pursuing fraudsters”; “blocking fraud”; and “empowering people”.

The government intends its strategy to reduce fraud by 10% by 2025 and we summarise below the key action points intended to achieve this. While the report runs to nearly 70 pages, there are few proposals likely to reduce significantly the prevalence of fraud in the UK (in large part because the resourcing appears insufficient). The report does include two significant new changes that are underway: the creation of a Failure to Prevent Fraud offence (see our article here) and the imposition of duties to tackle fraud on social media platforms (with fines for non-compliance). 

“Pursuing fraudsters”

The strategy paper announces three main changes in terms of enforcement:

  1. The creation of a “National Fraud Squad” with over 400 investigators and new specialist teams in the UK Intelligence Committee to share intelligence and drive enforcement action. While this is a step in the right direction (and the Home Office has also committed to reviewing overall police training in digital skills), 400 investigators working within the current resources to cover a £6.8 billion problem across the UK population of 67 million is insufficient, particularly when resource issues are causing the UK Serious Fraud Office to hold all cases in its intelligence division, as it lacks the resources to assign them to investigators[1].
  • Replacement of the UK’s anti-fraud reporting service, Action Fraud, with a new updated service within one year. Swifter action on processing reports has been promised, which is to be achieved by the service having access to new and advanced analytic capabilities, as well as a significantly increased volume of data. While the new service may make it easier to report fraud, and for those reports to be processed, it will remain a reporting service rather than an enforcement agency (and may increase pressure on enforcement agencies).
  • Changes to the criminal justice response to fraud. These include:
    • Further review of the Fraud Act 2006 to assess the effectiveness of existing fraud offences (and in particular whether the offences in the Act meet the challenges of modern fraud, including whether “penalties still fit the crime”);Introduction of the new offence of Failure to Prevent Fraud (see our article here), with the aim of implementing “a major cultural shift encouraging companies to do more to prevent fraud”; and
    • Legislation to make it easier to prosecute corporates for crimes committed by their senior managers, by improving the way decision-makers of the corporate are identified by law. Although no further details are given, this suggests the government is considering amending the identification principle on a statutory basis to specify who can be considered the direct mind and will of an organisation in order to attribute criminal liability to the organisation itself. This was one of the options previously considered by the Law Commission in 2022 (see our article here) but this did not find wider support.

“Blocking Fraud”

The strategy paper proposes two key initiatives in relation to blocking fraud:

  1. Voluntary Fraud Sector Charters to improve counter-fraud measures (with the priority being technology companies such as social media companies and well-known “tech” companies). Voluntary charters with the telecommunication, retail banking and accountancy sectors have already been agreed. The voluntary tech sector Online Fraud Charter is to be issued by the end of summer 2023.
  • The government’s Online Safety Bill will require ‘user-to-user’ platforms, such as social media, as well as search services, to put in place systems and processes to tackle fraud where it is facilitated through user-generated content or via search results, with regulatory fines imposed by Ofcom on both corporates and service providers who are individuals that fail to do so adequately.

“Empowering people”

The government will make amendments to the Financial Services and Markets Bill to enable the Payment Systems Regulator to require all PSR regulated payment service providers to reimburse all victims of fraud in relation to the Fast Payments Service (currently, victims of unauthorised fraud are entitled to be reimbursed by the bank within 48 hours). However, no such requirement exists for victims of authorised fraud (i.e., where the victim is tricked into authorising the fraudulent transaction). This will have a significant impact for payment service providers.

[1] HMCPSI Follow-up inspection of the Serious Fraud Office – case progression, May 2023 [para. 4.3]