Government will publish a Fraud Action Plan

Pardon the Interruption

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The government has responded to a report by the Work and Pensions Committee on pension scams, promising to publish a new Fraud Action Plan, review the effectiveness of rules giving trustees more powers to stop scams, consult on online advertising and consider making Project Bloom a formal central intelligence agency. 
 
Research by the FCA released on Wednesday as part of the ScamSmart consumer awareness campaign has highlighted the scams issue again, showing that scammers have targeted more than £2.2m in pension pots in the last five months. The average loss this year was £50,949, according to complaints filed with Action Fraud, more than double last year’s average, with reported losses ranging from under £1,000 to as much as £500,000. 
 
Of the 31 recommendations the committee made in its inquiry report, ranging from prevention and enforcement to victim support, the Department for Work and Pensions has said it agrees with a number of them, although others – such as greater recourse where a regulator’s actions have been beneficial to scammers – are not considered necessary. 
 
The government appears to have recognised the seriousness of the scams threat, with several agencies recently noting that the UK is risking becoming a fraud capital and that such crime could undermine the population’s trust in financial services, with significant consequences. 
 

Government to publish Fraud Action Plan after Spending Review 

 
The government’s Economic Crime Strategic Board, co-chaired by chancellor Rishi Sunak and home secretary Priti Patel, has in response “agreed an ambitious framework for a fraud action plan, covering the years 2022 to 2025”, according to the DWP, working with industry, agencies and law enforcement. 
 
“The Fraud Action Plan is now being developed and will commit key partners in the public sector and industry to do more to tackle fraud, focussing on key areas of response, public awareness and victim support,” the DWP said, adding that the plan will be published after this year’s Spending Review. 
 

DWP agrees to review legislation after 18 months 

 
The government has also agreed to review the new legislation on scams prevention – giving trustees greater power to stop transfers with the use of red and amber flags – within 18 months of regulations being in force, but it said it could not guarantee that any legislative changes following a review could be made during this parliament. “This would very much depend on the nature and urgency of any changes, and the legislative timetable,” it noted. 
 

DCMS will consult on online advertising this year 

 
During its inquiry the committee raised issues such as the role of big tech firms as largely unchallenged enablers for online scams. The online safety bill recently put forward addresses the problem only partially by including user-generated fraud, but the UK’s exit from the EU means an exemption from the financial promotions regime for online platforms has been removed, so tech companies have come into the remit of the FCA. 
 
The DWP also highlights that the Department for Culture, Media and Sports is considering how online advertising is regulated through its Online Advertising Programme. “This work will look at the role advertising can play in enabling online fraud and help inform our future efforts to tackle it. DCMS will be consulting on this issue later this year,” it said. 
 
TPR will also have another “burst of paid for activity” to raise public awareness of scams in September this year, following a three-year, £5m ScamSmart advertising campaign with the FCA. 
 

Project Bloom could become central data pool 

 
For better prevention, the committee stressed that better data was needed, as information and reporting of scams is currently fragmented and patchy. It recommended that the cross-agency network on scams, Project Bloom, should collect data about the scale of fraud. The DWP said it agreed with the need for better data, with TPR and the DWP having done their own internal reviews into Project Bloom. "The Government will look closely at the recommendations of both reviews and then set out the way forward later this year,” it said. 
 
The government said it agrees that Project Bloom, which has no statutory basis, “could benefit from being placed on a more formal footing within the existing partnership”, adding: “We are considering options as to which organisation could lead [a central coordination of intelligence], as well as any resource and funding considerations any change may entail.” 
 
HMRC, which left Project Bloom last year and was replaced by the Treasury - although it continued to be part of the communications group of the project – has now formally requested to rejoin the Project Bloom strategy group as well. 
 
The DWP also highlighted efforts by pensions minister Guy Opperman to get schemes to become members of the Pension Scams Industry Group, and the regulator’s scams pledge campaign, which has over 240 signatories so far, saying that it would ideally want to put the PSIG code on a statutory footing.  
 
“The Pledge campaign gives the industry the tools they need to comply with the PSIG code, which is voluntary - but ultimately, we would support the code becoming a statutory requirement, resulting in even stronger protection for savers,” it said. 
 

Have regulators increased enforcement? 

 
On enforcement, the department highlights how the Pensions Regulator is trying to come down hard on scammers, currently carrying out four criminal investigations into scams and fraud which cover 19 schemes, have 26 suspects and indicative losses to savers’ pensions of just under £30m. 
 
Last year, TPR secured two confiscation orders which will see more than half-a-million pounds returned to the victims it was stolen from, the report notes, and “this March, for the first time, TPR worked with the police to secure the extradition of a suspect in a pensions fraud investigation”, as scammers often operate offshore. 
 
The FCA, between January and October last year, managed to obtain restitution orders covering £14.3m, as well as £6.9m of funds being frozen and about £5.9m secured for investors for redistribution. Over the same period, the FCA reviewed and assessed over 24,000 reports of unauthorised business activity and issued 1,053 alerts, the report states. Of these, nearly half (401) were about ‘clone’ firms where fraudsters pretend to be authorised firms – showing again the role of domain hosts and other online firms in these crimes. 
 
However, a recommendation by the committee that the FCA publish a costed plan to raise its game in tackling scams and proactively publish data about its enforcement action – the regulator only did so after a freedom of information request – received a short response noting the FCA’s current collaborations and a promise to publish more data in future. 
 

Victim support to be stepped up 

 
Victims are set to receive better support in future, an area that previously received less attention. The Home Office has created the National Economic Crime Victim Care Unit, which “is being rolled out and will cover the majority of the population of England and Wales by the end of 2021”, the report says. ECVCU supports individuals who report a fraud or cybercrime to Action Fraud, but who do not receive any focussed service as their cases are not escalated for investigation. 
 

Do you agree with the measures outlined in the government’s response? 


Margaret Snowdon
John Wilson
Andy Agathangelou