HMRCSR0022
Written evidence submitted by Ian Stocks
Dear Public Accounts Committee
I respectfully ask the Public Accounts Committee (PAC) to scrutinise HMRC Senior Officials regarding HMRC's Management of Compliance and Customer Service when tackling error and fraud involving Visa and Mastercard Interchange Fees obtained by, and retained by, FCA-regulated banks in the HMRC AML-supervised, RICS-regulated estate agency trading sector. This information is readily available to HMRC because the associated FOS Final Decisions are published to the public domain. I offer my every assistance to ensure that HMRC has unimpeded access to the evidence to help support informed PAC debate.
Please may I also draw the PAC's attention to this media article; https://www.bbc.co.uk/news/business-67312650. (Source credit, BBC). No disclosed PSR data currently shows where the HMRC-supervised sector's error and fraud start because the PSR does not support the victim witnesses. The public facing bodies with error and fraud investigation capabilities and resources in HMRC's estate agency trading sector include the CAT, FCA, FOS, RICS, Skipton Building Society and Which?. Legal investigations relating to the acquisitions of UK estate agencies in HMRC's supervised sector are regulated by the SRA. I hereby report concerns to HMRC and the PAC that the SRA seeks a larger compensation fund for duplicated liability that is already protected by undisclosed Interchange Fees;
https://www.lawgazette.co.uk/practice/just-one-dodgy-scheme-could-drain-compensation-fund-sra-chief/5065321.article (Source credit, The Law Society)
HM Treasury designates the PSR as the lead competent authority for UK Interchange Fee Regulation and not HMRC, even inside the HMRC-supervised trading sector. Error and fraud reports from Visa, Mastercard and the PSR to HMRC and PAC are therefore critical for Parliament to be in an informed position to debate the tackling of interchange fee-based financial abuse, error and economic crime. This includes confirmation of which body is held accountable for each separate investigation and its subsequent reporting to HMRC. Calculating the total costs of multiple investigations into the same abuse taking place inside HMRC's trading sector must be understood by Parliament in order to deliver greater value for money. HMRC's Policy Partnership arrangement with HM Treasury is not shared by the above bodies but their fraud, AML, error and associated investigations would nevertheless greatly support HMRC's more efficient delivery of the wider HM Government economic aims. Many of the above bodies have MoUs with HMRC that obligate information and intelligence being shared, but the BBC link clearly shows Parliament is not receiving critical information, nor the SRA when raising growing financial liability concerns within the trading sector supervised by HMRC.
I therefore request the PAC questions HMRC about its risk assessments, HMRC's hierarchy of error and fraud investigation Authority and HMRC Compliance reporting obligations when HMRC works collaboratively with the error and fraud investigators within the Department for Business and Trade. This approach would ensure that the multiple private-funded and public-funded error and fraud investigations fully align with those undertaken within the FCA consumer protection framework. Please may I suggest some questions; the FCA and NCA now have far closer links, can their initiative enhance HMRC's receipt of serious error and fraud reports from the FCA, NCA and/or Police? How do Visa and Mastercard account to HMRC for the arising costs and conflicts when routing internal error and serious fraud cases away from PSR regulation and to SRA-regulated legal teams? How do the CAT investigation teams, numbering at least three, report to HMRC's serious fraud and AML investigators when reviewing FOS Final Decisions that collaborate HMRC and HM Government published concerns*? Who is accountable to the PAC should error and fraud consequences create wider adverse impacts? How would HMRC respond if the CAT did compel the PSR to release data that HMRC cannot access, can the CAT report directly to HMRC? How does HMRC transparently investigate and resolve furlough error and fraud reports in the RICS/SRA/FCA-regulated trading environments, and update risk assessments to mitigate new risks when prioritising competition over safety?;
(Source credit, This is Money, part of the Daily Mail, Mail on Sunday & Metro media group)
I would like to offer the following improvement opportunity. Please could the PAC consider a robust means for all HMRC investigations that acknowledge victims but do not identify the actual individual victims* to provide support to the victims once known to HMRC, thereby enabling HMRC itself to receive formal eyewitness accounts directly from the victims to help prevent recurrence. A monitored resolution path for victims to obtain financial redress, overseen by HMRC as sector supervisor, would send the clearest message to the industry that both unreported error and/or deliberate abuse will not be tolerated or abandoned. Visa and/or Mastercard may support this new opportunity because their error and fraud investigations are subcontracted, currently neither have direct sight of the abuse**.
*https://www.gov.uk/government/news/estate-agents-targeted-in-money-laundering-crackdown (Source credit, HM Government)
**https://www.mastercard.co.uk/en-gb/collective-action.html (Source credit, Mastercard), and
https://committees.parliament.uk/work/6491/the-work-of-the-payment-systems-regulator/news/172852/visa-and-mastercard-respond-to-treasury-committee-on-card-fee-increases/ (Source credit, UK Parliament)
This submission is not about being critical or finding fault. It is to encourage conversation to ensure that the Public Accounts Committee is placed in a fully informed position by HMRC. This will facilitate informed public spending debates about error and fraud to help maximise the HMRC delivery requirement to safeguard the flow of money to the Exchequer. I would also welcome NAO input to confirm the true costs of error and fraud investigation, beyond that of HMRC.
I again offer my ongoing assistance to the PAC and to HMRC, and I do so in the public interest. I welcome any contact by HMRC, the PAC or my MP. I give my permission for this submission to be published with my name attached.
December 2023
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