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Banks: Fraud

Volume 771: debated on Thursday 5 May 2016


Asked by

To ask Her Majesty’s Government what steps they are taking to tackle banking fraud, including internet and telephone scams.

My Lords, the Government have set up the Joint Fraud Taskforce, bringing together banks, law enforcement and government to create a strong collective response to fraud. They have also committed to spending £1.9 billion on cybersecurity over the next five years, which includes tackling cybercrime, and have published a guide for consumers on how they can protect themselves from fraud online.

My Lords, a report published by Which? yesterday showed that one in three victims of banking fraud have to wait four weeks for the banks to take action. If banks were forced to compensate customers when their security systems fail, perhaps they would take this problem a bit more seriously. Can the Minister say whether the Joint Fraud Taskforce will take this crucial principle as its guide?

I cannot say that any one principle will be taken as the guide to the work of the Joint Fraud Taskforce, which embraces a partnership between banks, law enforcement and government. What I can say is that there is a provision whereby, under regulation, if there is a fraud against someone’s credit card the banks can leave that in the hands of the consumer only where there has been gross negligence. The onus lies very much on the banks to deal with these claims and they are doing that. Indeed, the joint taskforce is taking forward further measures to ensure a reduction in fraud.

My Lords, since this Question refers to banking problems, can the Minister update us on the Government’s attitude towards a problem that potentially affects every single Member of this House—namely, that we are in danger of being designated as politically exposed persons?

There is the question of our status, which banks are addressing, but I am not in a position to say how that is to be resolved.

My Lords, I declare my interest as chair of the National Trading Standards Board, which works in this area. Can the Minister tell us what steps are being taken to deal with the problems that exist from the trading of victims’ lists—suckers’ lists—between scammers? The estimate is that there are several hundred thousand, primarily elderly, people whose names are on those lists and who are seen as soft targets by criminal gangs. Within the work that the noble and learned Lord has outlined, what steps are being taken to deal with that problem?

I am obliged to the noble Lord. Action Fraud, which is the central reporting point in fraud and cybercrime, is liaising with Victim Support to address the problems for particularly vulnerable persons. That work is being taken forward under the cybersecurity programme.

My Lords, only last Saturday I received a telephone call from my bank saying it thought my card had been cloned and asking me if I had been responsible for a particular transaction, to which I said no. This bank is very alert: it stopped the payment immediately and sent me a new debit card. I cannot express my gratitude to it more—it is HSBC. On a previous occasion, when more than £2,000 was taken out of my account, it did the same and I lost nothing. It needs to be congratulated.

I am obliged to the noble Countess. In addition to these initiatives, we also see that telephone companies are taking steps to cut down the time in which a phone line can remain open when a bank telephones a customer, because there are circumstances in which fraudsters will attempt to use that open time to perpetrate a fraud.

I am not sure that the Government’s response reflects the severity of the situation. After all, in 2015, financial fraud losses across payment cards, remote banking and cheques totalled, I think, some £755 million—an increase of 26% compared with the previous year. The ONS estimates that there have been 5.1 million incidents of online fraud in the last year. Why have the Government not even started, with the banking industry, to get a grip on this booming area of crime, which is adversely affecting so many people? If the noble and learned Lord believes the Government are taking action, when do the Government expect to see a downturn in such fraud?

I am obliged to the noble Lord. In 2015, 70% of fraud was stopped—70%. As regards the numbers, we have seen an increase in reported banking fraud, simply because this Government have instituted far better systems for identifying fraud and breaches of cybersecurity. With respect, it is not going up. The noble Lord observed that there was an increase in card fraud, but that is not the case. In fact, fraud in respect of credit cards reduced by 4% in the last reported years. Wider reporting of fraud is, as I say, a consequence of our having instituted far better systems for identifying breaches of cybersecurity. I simply remind the noble Lord that it is more than just the Joint Fraud Taskforce dealing with this. We have the national cybersecurity programme, a five-year strategy under which £90 million has already been expended on this; the National Cyber Security Centre; the Cyber Streetwise campaign for online security; Project Bloom for the task force on pension fraud; and the Insurance Fraud Taskforce. Indeed, the Chancellor has committed £1.9 billion to spend on cybersecurity.

My Lords, will my noble and learned friend advise the House of the number of prosecutions? I, too, have been a victim—successfully, unfortunately, when £300 was taken from my bank card within the space of 20 minutes. Will my noble and learned friend explain how many prosecutions are taking place? If the current law is rigorous enough, surely it is for the police to prosecute successfully the perpetrators of this crime.

I do not have figures for prosecutions for fraud because it covers a wide spectrum. I will, however, undertake to write to the noble Baroness with such figures as we have, covering in particular banking fraud. Beyond that, I would say that this is the responsibility not just of the police but of Ofcom and indeed of the communications regulator, both of which have powers to impose severe penalties for misuse of cyber and telephone access.