Tackling the Silent Threat of Fraud: Amplifying the UK’s Response

Better late than never: after the 'lost decade' of the 2010s, the UK government has started to make progress in combatting fraud. Image: Tomasz Zajda / Adobe Stock

As the UK government’s first Fraud Strategy turns one, how can a future government turn up the heat on the ‘silent threat’?

For many working in the counter-fraud profession, the 2010s are very much seen as a ‘lost decade’ during which the state-led counter-fraud effort stagnated at precisely the same time as organised fraudsters were capitalising on a range of technological and societal advances. By the time of the Covid-19 pandemic – itself an accelerator of the problem – the crime had reached astronomical levels, costing the UK economy an estimated £190 billion a year. This has led many, including the author, to view fraud – by dint of its sheer scale and links with organised crime and terrorism – as a ‘silent threat’ to national security.

In 2023 the penny dropped, with the government launching its first Fraud Strategy. The high watermark of this turnaround in the fortunes of fraud as a policy priority was clearly on show in March 2024 during three days of high pomp in London’s Lancaster House, with the UK government hosting the world’s first Global Fraud Summit.

This event attempted to build an international consensus on the way forward for tackling the global crime wave that is fraud, with the post-summit communique talking of an acceleration of multilateral responses and cross-border working. This is all to the good. However, as the author has frequently opined, it is in fact domestic deeds and not multilateral words that are the best way to show global leadership.

The Annual Appraisal

Delivery of the UK’s domestic Fraud Strategy is a clear way in which the UK government can show such leadership. As it passes its first anniversary, therefore, does it demonstrate that the UK can walk the talk on countering fraud? And as the 2024 general election approaches, what might the next generation of fraud reforms look like?

The answer to the first question is arguably yes, at least on paper. In the past year, the government has moved the legislative framework for tackling fraud forward by scheduling new draft legislation banning possession of SIM farms (a key tool for all-too-familiar ‘smishing’ attacks by organised criminals) and launching a consultation on regulations to ban cold calling for financial products to reduce the threat of investment fraud.

It is essential that combatting fraud – and wider economic crime – has the proper leadership across government to prevent it remaining everybody’s problem, but nobody’s priority

It has clarified the scope of the new mandatory authorised push payment fraud reimbursement requirement, to protect people making payments over the UK’s ‘faster payments’ network. Most recently, the Treasury has announced its intention to issue regulations to allow banks to slow down payments where a suspicion of fraud exists.

As regards the policy sphere, in November 2023 the government launched the Online Fraud Charter, setting out voluntary counter-fraud measures agreed with some social media and tech companies, and in February 2023 it delivered a high-profile public information campaign. Combined with measures to bolster policing with an additional 400 officers and to reboot the much-maligned Action Fraud victim reporting service, more has arguably been done more in the past 12 months than over the previous 12 years.

Fraud as a Ballot-Box Issue

However, while welcome, the measures in the Fraud Strategy may not be enough to regain the ground conceded to the fraudsters during the ‘lost decade’. As a general election looms and as fraud – the crime which UK adults are most likely to become a victim of – seems set to become more of a ballot-box issue than ever before, where might a future government response to fraud go further?

First and foremost, it is essential that combatting fraud – and wider economic crime – has the proper leadership across government to prevent it remaining everybody’s problem, but nobody’s priority. While the creation of an Anti-Fraud Champion has been a welcome focal point for progress, the position lacks the necessary authority to drive forward a ‘whole-of-system’ response to fraud. Creating a non-departmental Minister for Economic Crime, reporting directly to the National Security Council, should be high on the list of machinery-of-government changes for a future government.

Second, recent investment in a new ‘National Fraud Squad’ is welcome. However, its ‘virtual’ format means it is somewhat illusory, with the additional 400 new posts spread across the National Crime Agency, the City of London Police and Regional Organised Crime Units. Not only should the numbers be boosted further, but the response also requires clearer coordination and a ring-fenced policing budget as set out in a previous RUSI paper.

The law and criminal justice system is ill-set up to respond to the modern face of fraud, which is – to a significant extent – an online and upstream affair

Third, recent efforts to improve the response for individual victims, including the creation of the National Economic Crime Victim Care Units, are welcome. However, the fraud strategy fails to cover an important and growing target of fraudsters – the business community. UK Finance figures from 2021 show that small- and medium-sized enterprises (SMEs) are increasingly being targeting by fraudsters, with a 35% rise in SME scam victims during the pandemic. The impact of this can be devastating for businesses, ranging from lack of consumer and investor confidence right through to outright business collapse. Despite this, the fraud strategy only covers consumer fraud. To protect the UK’s economic security, this gap in the response must be rectified.

Fourth, it is a truism that the law and criminal justice system is ill-set up to respond to the modern face of fraud, which is – to a significant extent – an online and upstream affair. To respond to this, it is important that the independent review of disclosure and fraud finds a solution which adequately balances the need for a fair and just criminal justice response with the terabytes of data and multi-jurisdictional nature of many modern frauds. Further, it is important that the review considers the necessity of explicitly criminalising one of the fastest growing precursors of fraud – identity theft – in name rather than simply in practice.

Finally, there is a need to grapple with the outsized elephant in the room – that is, the role of social media and Big Tech companies in propagating fraud. With UK Finance data showing that two thirds of authorised push payment frauds originate online, there are those that argue that the (voluntary) Online Fraud Charter is a fig leaf. On this basis, a future government should ensure that measures proposed in the Ofcom Illegal Harms Regulations – which will underpin the fraud-specific obligations set out in the Online Safety Act 2023 – are considerably strengthened, and that consideration is given to how to better share the cost burdens of fraud more equitably across industries.

In summary, the pace of progress over the past 12 months has been impressive and has certainly set the tone for a future response to fraud. A future government should avoid ripping up the blueprint and starting again. Instead, it should see the Fraud Strategy for what it is – a strong set of foundations upon which to build the UK’s defences against the silent threat.

The views expressed in this Commentary are the author’s, and do not represent those of RUSI or any other institution.

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Helena Wood

Associate Fellow; Head of Public Policy at Cifas

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