Source · Select Committees · Public Accounts Committee
Recommendation 20
20
Accepted
The Department acknowledged that its voluntary approach to working with industry had caused inconsistencies for...
Recommendation
The Department acknowledged that its voluntary approach to working with industry had caused inconsistencies for victims and explained that it was beginning to introduce some mandatory measures. For example, it told us that only about 50% of victims of authorised push payment fraud are reimbursed by their banks because reimbursement was on a voluntary basis.41 In May 2022, Government recognised that in recent years, authorised push payment scams, where someone is deceived or defrauded into authorising a payment to a criminal, have increased both in value and volume, with many individuals suffering significant financial and emotional harm. In response, HM Treasury announced that the Financial Services and Markets Bill will include provision to make reimbursement mandatory.42 However, not all stakeholders support this approach. In written evidence, UK Finance warned that focusing on reimbursement was “too little too late” and asserted that greater efforts were needed upstream to stop fraud at its source.43 The NCA told us that provisions in the draft Online Safety Bill will also be mandatory and will have significant penalties attached. But the NCA said it would welcome a ‘failure to prevent’ offence to go 37 Public Accounts Committee, Sixth Report of Session 2017–19, The growing threat from online fraud, HC 399 38 Q 87; C&AG’s Report, para 2.19 39 Q 106; C&AG’s Report, para 2.19 40 Written evidence submitted by UK Finance dated November 2022 41 Q 62 42 HM Treasury Policy Paper, Government approach to authorised push payment scam reimbursement, 10 May 2022 43 Written evidence submitted by UK Finance dated November 2022 16 Progress combatting fraud even further in changing industry behaviour. Our sister Committee also recommended that ‘a failure to prevent fraud’ offence should be introduced to hold companies to account for fraud occurring on their systems and encourage better corporate behaviours.’44 Working with international partners
Government Response Summary
The government agrees and states that 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, and is introducing measures in the Financial Services and Markets Bill to allow the PSR to mandate reimbursement to fraud victims.
Government Response
Accepted
HM Government
Accepted
6. PAC conclusion: The Department’s reliance on voluntary charters does not produce a strong enough incentive for industry to rapidly improve its response to fraud. 6. PAC recommendation: 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. 6.1 The government agrees with the Committee’s recommendation. Target implementation date: Ongoing until Spring 2025 6.2 Tackling fraud requires government, law enforcement and different industry sectors to 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. 6.3 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%. 6.4 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. 6.5 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. 6.6 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