Written evidence submitted by Aviva (OSB0042)

About Aviva PLC

Aviva is an international insurance and long-term savings business, which provides life insurance, general insurance, health insurance and asset management services to over fifteen million customers worldwide. Here in the UK, we are the market leading insurance business, serving one in every four households. We help more than five million people with their retirement needs, and meet the pension requirements of more than 20,000 companies, ranging from large multinationals to small start-ups.

Aviva supports towns and communities across the whole country by employing 15,000 individuals in high-skilled careers, the majority of which are outside London in regional centres such as Norwich, York, Bristol, Sheffield, and Perth. We have also invested over £15 billion in UK social infrastructure over the last ten years, and have plans in place to invest a further £10 billion over next three years.

Aviva’s Response

In line with the Committee’s expectations, we have not addressed all questions posed. Instead, we have focused on those questions most relevant to financial harms, which is a matter of great concern to Aviva and our customers. We welcome this opportunity to contribute to the Committee’s inquiry.

Objectives

Q. Will the proposed legislation effectively deliver the policy aim of making the UK the safest place to be online?

• As a company, we recognise and welcome the shift towards online services, a trend which has only accelerated as a result of the coronavirus pandemic. However, fundamental to this shift is keeping pace with the behaviour of criminals in relation to online fraud.
• Fraudsters are increasingly using online platforms to target their victims, yet platforms have very little legal responsibility to protect users online. In May this year, Action Fraud reported that over £63 million was lost to investment fraud on social media platforms, with victims reporting that they were mainly attracted to these investment scams through adverts[1].
• As it stands, the Online Safety Bill is proposing to tackle fraudulent investment schemes posted by users on social media platforms, but the Bill will not tackle the exact same scheme when its digitally advertised or set up through a cloned website. This will leave a large proportion of the public at risk of being scammed online, as criminals are experts in adapting their tactics to exploit any legal loopholes.
• We recognise that the Government is progressing with proposals to reform how online advertising is regulated, with an initial consultation expected later this year. However, we are concerned that this approach may not be comprehensive enough nor timely enough to tackle the immediate problem of people losing their life savings through this type of online fraud.
• If the Government is to realise its ambition of making the UK one of the safest places in the world to be online, then we believe the provisions of the Online Safety Bill should be amended further to include the advertising of online financial promotions, as this represents the most effective way to protect financial services consumers at every stage of their online journey.

Q. Does the draft Bill make adequate provisions for people who are more likely to experience harm online or who may be more vulnerable to exploitation?

• No, we do not believe the legislation in its current form will adequately protect vulnerable consumers from the risk of financial harm online, which can have a devasting impact on the financial and mental wellbeing of victims.
• Our latest Fraud Report, which uses consumer research to investigate fraud and financial scams in the UK, highlights that the challenging economic conditions and increased financial strain brought about by the coronavirus pandemic has created the perfect storm for fraudsters to exploit the most vulnerable online.
• The Report found that, whilst the types of financial scams are generally unchanged, the scale of online fraud has accelerated through the pandemic. Scams range from attempts to sell people unsuitable car insurance to stealing their entire retirement savings. Imitation websites that copy well-known financial services brands are now commonplace, with the Financial Conduct Authority reporting that £78 million was stolen in clone-firm investment scams in 2020, which amounts to an average loss of over £45,000 per victim [2].
• Our research indicates that online fraud is also undermining consumer trust in the financial services sector as a whole, with more than half of internet users (53%) no longer believing that adverts on search engines are placed by a legitimate financial services firm. Whilst more than half (56%) of users don’t believe that search engines verify the authenticity of the financial product or service that they allow to be advertised on their platform[3].
• Currently, there is no legal responsibility for technology firms to verify the legitimacy of the companies which pay them to publish adverts on their platforms. This potentially leaves millions of internet users exposed to adverts placed by unscrupulous companies, and opens the door to fraudsters looking to prey on the most vulnerable.
• The recessionary factors caused by the pandemic have arguably created the biggest fraud threat to consumers in a generation. Currently, Government intervention is mitigating many of these financial impacts, but as Government withdraws financial support for businesses and individuals, we expect to see more fraud in the coming year.
• That is why we believe the Online Safety Bill should be amended further to include financial scams promoted by paid-for advertisements, as simply regulating user-generated online scams will not be comprehensive enough to protect consumers online.
• This is a view endorsed by our research, with almost nine out of ten people (87%) believing that Government should introduce legislation to ensure that search engines and social media platforms do not mislead consumers or promote financial scams through the advertising they allow to appear on their sites[4].

Content in Scope

Q. The draft Bill specifically includes CSEA and terrorism content and activity as priority illegal content. Are there other types of illegal content that could or should be prioritised in the Bill?

• The prioritisation of child sexual exploitation and abuse (CSEA) and terrorism content is understandable and welcome. However, this should not be to the exclusion of other illegal activity. The controls needed by service providers to identify, report, and remove CSEA or terrorism content can equally be deployed against other forms of illegal activity.
• If further prioritisation of illegal content is required, it should reflect the Government’s own assessment of serious and organised crime threat as published by the National Crime Agency in the National Strategic Assessment of Serious and Organised Crime 2021. To quote the National Crime Agency ‘our priorities remain tackling offenders at the high end of high harm, those who exploit the vulnerable, dominate communities and undermine the UK’s economy… our most effective means of disrupting these offenders is to target the technologies and capabilities that enable them’[5].
• Prioritisation should be driven by the National Crime Agency’s independent assessment to ensure alignment to Government priorities, rather than be driven by those potentially impacted by the Online Safety Bill.

Q. Are there any types of content omitted from the scope of the Bill that you consider significant e.g. commercial pornography or the promotion of financial scams? How should they be covered if so?

• Content that facilitates, enables or promotes fraud (as defined in the Fraud Act 2006) should be specifically included in the scope of the Online Safety Bill. Fraud is now the most common crime type in England and Wales, with the National Crime Agency recognising that online advertising has become a gateway for fraud.
• The insurance industry is determined to do everything it can to protect consumers from being the victims of fraud. However, scams can range from non-existent motor insurance cover, being involved in a staged crash, to being offered bogus investment opportunities which could put someone’s life savings at risk. Our data shows that the most common types of fraud are:
• The Policy Review – a typical health and life insurance scam involves a cold call telling consumers to review their policy. The fraudsters will claim they’re from a reputable insurance company or that they’ve been asked to do this by the regulators. They may offer lower premiums, but what they don’t mention is that the lower premium also means reduced cover, often leaving the consumer with a worthless policy.
• Pensions, Investment and Savings – as stock markets have fallen in value and the Bank of England base rate is at 0.1%, people with investments are much more vulnerable to falling victim to scammers offering unrealistically high rates of return. People are usually offered a ‘unique’ investment opportunity or the chance to unlock cash in a pension.
• Clone-firm Investment Fraud – fraudsters set up imitation websites which look like well-known financial services brands, through which they sell bogus products. Victims of this type of fraud tend to be people approaching retirement age, who have access to their pension pot and are looking for better interest rates for their savings. As of April 2021, we had received nearly 1000 reports of this type of scam, while over 90% of the fraud that Aviva witnessed during the pandemic involved cloned investment fraud.
• Application Fraud – ghost broking is at the sharp end of application fraud, and is when an unauthorised insurance intermediary fraudulently takes out motor insurance policies on behalf of people looking for cheap car insurance. Ghost broking is increasingly common, with our research showing that 21% of people have been approached by someone who they suspected was not an insurance broker, but who was claiming to offer access to cheap insurance. Young people aged 16 to 24 are the age group most targeted, with 43% saying they have received this type of approach[6].
• Aviva has a number of controls in place to help prevent or limit the impact of fraud, working closely with law enforcement agencies such as the National Crime Agency to report fraudulent activity, and involving them in sector wide problems identified through appropriate intelligence sharing.
• We also launched an online Fraud Hub in May 2020, at the height of the pandemic, to help protect the public and our customers from scams. It provides practical advice on spotting scams and includes a reporting service for potential or actual frauds. Our Financial Crime Unit will investigate every reported incident and will provide customers with guidance on what action they can take.
• However, the best way we can protect consumers is through effective regulation. That is why we believe the Online Safety Bill presents a real opportunity for Government to act, and tackle the issue of financial harms online, and is why we are calling for the scope of this legislation to include financial scams promoted by paid-for adverts and clone investment fraud.

Aviva PLC

September 2021

17 September 2021