Source · Select Committees · Public Accounts Committee
Recommendation 6
6
Accepted
The Department’s reliance on voluntary charters does not produce a strong enough incentive for industry...
Recommendation
The Department’s reliance on voluntary charters does not produce a strong enough incentive for industry to rapidly improve its response to fraud. Industry sectors, such as banking, technology and telecoms, have a vital role to play in designing out opportunities for committing fraud. However, not enough has changed since we last looked at this five years ago. The Department is still reliant on voluntary action from industry, leading to inconsistencies for victims. For example, only around 50% of victims of authorised push payment fraud, where the victim is pressurised to authorise a payment, get their money back. The Department admits that inconsistency arises because reimbursement is on a voluntary basis and is looking at introducing mandatory reimbursement. It is possible to secure impacts through voluntary charters. For example, the Department asserts that persuading telecoms companies to block scam texts sources led to more than a 90% reduction on some operators. However, we are concerned that progress by these means is often difficult and slow, exposing people to the threat of fraud in the meantime. Recommendation 6: The Department should set out, as part of its Treasury Minute response, how voluntary charters will contribute to its fraud strategy, including what changes it expects to see as a result of the charters, by when these will be achieved and what action it will take if they are not.
Government Response Summary
The government will continue to use voluntary charters to drive improvements in the industry's response to fraud, mandating reimbursement to fraud victims via the Payment System Regulator (PSR), legislating to give banks the power to delay suspicious payments, and publishing further charters.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. work collaboratively towards the same aim, harnessing expertise, resources and powers. The sector charters provide the necessary structure to turn goodwill into clear actions to support the overall Strategy goal to cut fraud by 10% by end of 2024. The department has seen progress since the launch of the first tranche of Charters. All mobile network operators have implemented firewall solutions to detect and block scam texts reaching consumers. Subsequently, 600 million scam texts have been blocked and reports to the 7726 service where these can be reported have fallen by over 85%. In 2022, the Payment System Regulator (PSR) closed a consultation to support the actions to prevent authorised fraud and protect customers in the banking sector charter. The government is now introducing measures in the Financial Services and Markets Bill to allow the PSR to mandate reimbursement to fraud victims. The government is also legislating to give banks the power to delay suspicious payments to help prevent fraud. The government will publish further charters, including with the insurance sector by early 2024. Work is underway on the Online Fraud Charter, with the government seeking concrete actions on proposals such as improving reporting, data sharing and transparency. The government has appointed Anthony Browne MP as Anti-Fraud Champion to drive work with industry and ensure that companies are incentivised to combat fraud and to explore all avenues to do so. Delivery of the charters is overseen by the Joint Fraud Taskforce, chaired by the Security Minister.