FOS and FCA join forces to fight £755m fraud issue

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The Financial Ombudsman Service, the Financial Conduct Authority and other UK-based financial services watchdogs have joined forces in a bid to crackdown on rising instances of financial services fraud in the UK. 

Last year £775m was lost to financial fraud, an increase of 25% year-on-year, according to the latest ‘Ombudsman Focus’ newsletter, published today by the Financial Ombudsman Service (FOS) on its website.

The increase, the FOS says, is down to the fact that criminals’ methods are growing ever more sophisticated and according to Caroline Wayman, chief executive at the FOS, financial scammers were increasingly using new technology to try and dupe people put of their savings, with 16% of scams involving bank transfers.

‘Fact of daily life’

“Unfortunately, scams are a fact of daily life and when daily life changes, scams evolve with it,” she said. “In particular, new technologies – which should make life easier – inevitably come with new risks. So while some people continue to receive fake investment opportunities through their letterbox, others are falling victim to ‘number spoofing’ on their mobiles – or finding their online business banking threatened by malware.”

Using the data taken from the 2015 Opinium survey, the FOS found that 63% of people in the UK had received a suspicious call over a 12-month period, with 7% of the UK population falling victim to phone fraud between 2010 and 2015.

‘Significant increase’

Michael Ingram, senior ombudsman at the FOS, said: “Over the last couple of years we’ve seen a significant increase in cases where people have been tricked into making payments. The circumstances in which this happens are varied – and, it seems, constantly changing – and can involve payments made online, in branch or over the phone.”

Rebecca Langford, policy lead for older people at Money Advice Service, pointed to research carried out in October 2015 that found that more than six in ten people had received a suspicious phone call during a 12 month period. And worryingly, the Financial Ombudsman Service’s review of complaints about phone fraud also found that eight in ten victims were aged over 55.

“Scammers are clever and will often exploit the latest technology to impersonate genuine organisations, meaning fraudsters are harder than ever to recognise.” said Langford. “We need to work together to make sure that everyone has the financial capability – the ability, mindset and connection to advice and financial services – needed to protect themselves.

‘Outside of the UK’

Langford said that the regulators and financial watchdogs are looking at overseas solutions in a bid to combat the 25% rise in financial fraud in the UK.

“Unfortunately there is currently very little UK-based impact evaluation of scam awareness programmes,” she said. “This means we don’t have enough evidence to determine what works best to engage with people about scams to help them protect their finances. With this in mind, we have examined a number of schemes from outside the UK which have been designed to prevent people becoming victims of fraud.

FCA: 8,500 reports

Mark Steward, director of enforcement and market oversight at the Financial Conduct Authority said that in 2015 it received more than 8,500 reports about potential unauthorised activity.

“We assess all of these cases and we investigate and take action on as many as we can. This includes taking civil court action to stop activity and freeze assets; insolvency proceedings; and, for the most serious cases, criminal prosecution,” said Steward. “Last year, as a result of our actions, 8 people were sent to jail for a total of 32 years, we froze over £2.7m, returned nearly £1m to victims and secured injunctions and other orders against unauthorised  firms and those behind them.

250 unauthorised firms

“We also issued public warnings about 250 unauthorised firms in order to deter potential investment frauds.”

Katy Worobec, director of Financial Fraud Action UK, said that the amount lost to fraud could have been much worse, as UK banks security systems stopped £7 in every £10 of fraud from happening last year.

“Despite the industry’s best efforts, financial fraud losses totalled £755m in 2015, an increase of a quarter on 2014,” said Worobec. “Fraud losses on UK payment cards totalled £567.5m and remote banking fraud losses stood at £168.6m last year.

“The industry is continually evolving its response to financial fraud and this includes investing in new detection and verification tools, working with government and law enforcement through the Joint Fraud Taskforce, as well as educating customers of the dangers,” she said.

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Gary Robinson

Commercial Director, Head of Video at International Investment.