The UK government should introduce a new corporate criminal offense to ensure big tech platforms and telcos crack down on financial crime, colleagues have urged.
The recommendation, in a report released Saturday by the House of Lords’ Fraud Act 2006 and Digital Fraud Committee, reflects growing concerns that the cost of living crisis has made consumers even more vulnerable.
“Platform companies and telcos have basically bailed out with no responsibility for the fact that many of their customers are experiencing fraud through their platforms and devices for the first time,” said Baroness Nicky Morgan, the committee’s chair.
“The scale of the fraud is eroding people’s trust in financial institutions and the companies they deal with.”
The report calls for the proposed criminal offense of “omission to commit fraud” to be applicable across all sectors and carry fines.
Morgan said the legislation should reflect health and safety regulations, which may result in company leaders being prosecuted or disqualified. “It’s both about changing behaviors and allowing the courts and police to prosecute more people,” she said.
Fraud rose during the pandemic, with an 8 per cent rise in 2021, according to data from financial services trade body UK Finance, which described the crime as an “epidemic”.
On Friday, the Pensions Regulator, the Financial Conduct Authority and the Money and Pensions Service warned of increased vulnerabilities to pension fraud due to economic uncertainty, including turmoil in the sector sparked by former Chancellor Kwasi Kwarteng’s “mini” budget.
While online platforms face a duty of care to protect their users from fraud under the Online Safety Act currently making its way through Parliament, it does not cover telecom companies and other related sectors.
The online safety law has been welcomed by lenders who argue they are the only parties obliged to compensate users affected by fraud and fraud, but some have called for further changes.
“It’s a very good step, but I think more needs to be done,” said Sian McIntyre, managing director at Barclays UK, urging tech companies to release data on the nature and scale of fraud on their platforms.
TechUK, a trade body for the technology industry, did not immediately respond to a request for comment.