The government has unveiled its nationalfraud strategy, as this criminal activity costs the UK £7bn per year and two thirds of that, or just over £4.5bn, is as a result of identity fraud.
The new strategy will outlaw so-called ‘SIM farms’ that allow criminals to scam text to thousands of people at the same time and ban cold calls on all financial products. The government will also work with Ofcom to prevent ‘spoofing’, where scammers impersonate UK numbers to trick people into thinking they’re speaking to banks and other legitimate businesses.
Prime Minister Rishi Sunak said: “ Fraud now accounts for over 40% of crime. It costs us nearly £7 billion a year and we know these proceeds are funding organised crime and terror. What’s more, new technologies are making these scams easier to do and harder to police.
“It’s time to take the fight to the scammers and fraudsters, and put an end to these crimes which can devastate lives and livelihoods within seconds.”
However, a Freedom of Information request by financial advice group Quilter found that over the last eight years, just 29% (1,173) of the nearly 4,006 pension fraud reports submitted to Action Fraud were disseminated to local police forces for investigation by the National Fraud Intelligence Bureau, which sits alongside Action Fraud. In some years, the number of pension fraud reports to Action Fraud that were sent to the police for investigation was as low as 6%.
Action Fraud says the average loss to each victim is around £75,000, although it is estimated that the figure is higher as many victims are unaware they have fallen victim to a fraud.
As part of the government’s new fraud strategy it will launch a new National Fraud Squad led by the National Crime Agency and the City of London Police.
However, Quilter warned that pension scams are often extremely complex and in many cases, only discovered years after the event. This means that Action Fraud and the investigatory agencies are forced to prioritise the cases they believe can lead to a successful criminal justice outcome. For the vast majority of pension scam cases, the chances of reaching this stage are slim.
Quilter has urged the government to make faster progress with the Online Safety Bill, which was due to have already been introduced to Parliament but continues to be delayed with numerous amendments. The bill means search engines and social media platforms will have a legally enforceable duty to remove suspected scammers and scam adverts immediately on notification and improve their due diligence process so that it becomes harder for scammers to market investment products using paid adverts.
Jon Greer, head of retirement policy at Quilter, said: “Unfortunately, especially during economically difficult times, scammers thrive as hard-working people get their heads turned by too good to be true deals. These figures show that over the past few years, as finances have been stretched, many more scams have had to be passed on to local forces for investigation. This shows why it is important that the government’s new strategy gets a grip on fraud.
“Sadly, because pensions are for the long term it can be years before victims realise they have been scammed and their money has gone. Once they are uncovered pension scams are extremely complex, they can span multiple jurisdictions. This all makes investigating the scams incredibly time consuming and expensive, which is why the police have to prioritise those few cases where they have a chance of success.”
Greer said the pension transfer regulations brought in during 2021 have had a positive impact on highlighting scams, but even with those regulations in place, scams continue to be perpetrated.
“Getting retribution for a pension scam can be tricky so we should be going to the root of the problem and that starts with getting the Online Safety Bill over the line. The government continues to risk people losing their life savings while this legislation stalls,” he added.
