The British government should introduce a new corporate criminal offence to ensure that Big Tech platforms and telecoms companies tackle financial crime, peers have urged.
The recommendation, in a report released on Saturday by the House of Lords’ Fraud Act 2006 and Digital Fraud committee, reflects growing concern that the cost of living crisis has made consumers even more vulnerable.
“Platform companies and telecom companies have basically skipped off without responsibility for the fact that many of their customers are first encountering fraud over their platforms and devices,” said Baroness Nicky Morgan, the committee’s chair.
“The levels of fraud are undermining people’s confidence in financial institutions and in the companies which they’re dealing with.”
The report calls for the proposed criminal offence of “failure to prevent fraud” to apply across all sectors and come with financial penalties.
Morgan said the legislation should mirror health and safety rules, which can lead to the prosecution or disqualification of company directors. “It’s as much about changing behaviours as it is about allowing the courts and police to prosecute more people,” she said.
Fraud surged during the pandemic, with an 8 per cent increase in 2021, according to data from financial services trade body UK Finance, which described the crime as an “epidemic”.
On Friday, the Pensions Regulator, Financial Conduct Authority and the Money and Pensions Service warned of an increased vulnerability to pension scams due to economic uncertainty, including turmoil in the sector triggered by the “mini” Budget of former chancellor Kwasi Kwarteng.
While online platforms will face a duty of care to protect their users from fraud under the online safety bill currently working its way through the parliament, it does not cover telecoms companies and other related sectors.
The online safety bill has been welcomed by lenders, who argue that they are the only parties required to compensate users affected by fraud and scams, but some have called for further amendments.
“It’s a very good step but I do think that more needs to be done,” said Sian McIntyre, a managing director at Barclays UK, including requiring tech companies to publish data on the nature and volume of scams on their platforms.
TechUK, a trade body for the tech industry, did not immediately respond to a request for comment.
