Written evidence submitted by the Home Office

The Government would like to thank the Justice Select Committee for opening an inquiry on the important and serious issue of fraud and the justice system. Victims can suffer both serious financial and emotional harm, and we know the money fraudsters make can go on to fund serious and organised crime. Tackling fraud requires a unified and co-ordinated response from government, law enforcement and the private sector to better protect the public and businesses from fraud, reduce the impact of fraud on victims and increase the disruption and prosecution of fraudsters. Please see our evidence for consideration. 

How the Justice System conducts fraud investigations and prosecutions 

Fraud incidents reported to Action Fraud are analysed by the National Fraud Intelligence Bureau (NFIB) to identify information that could assist investigation and identify links between incidents. Where there is sufficient evidence and a viable lead, the NFIB creates intelligence packages and sends (‘disseminates’) them to an appropriate local police force to investigate. This usually means sending them to a police force where a suspect is located.  

Local police forces in England and Wales are currently responsible for investigating fraud cases, however, some especially complex and high-profile fraud cases are investigated by specialist national fraud investigation teams.

In addition, the National Crime Agency (NCA) is the lead agency for tackling serious and organised crime and hosts the National Economic Crime Centre (NECC), the operational lead on economic crime. The NECC proactively identifies new fraud cases and runs a new tasking and coordination process to get these high-priority investigations taken forward across the NCA, policing and Serious Fraud Office (SFO). The SFO also play a role in investigating some very large national and international fraud cases.

The Crown Prosecution Service (CPS) prosecutes criminal cases that have been investigated by the police and other investigative organisations such as the NCA in England and Wales.  The CPS is independent, and they make their decisions independently of the police and government. The SFO are able to prosecute their own cases.

The Government recognises that to increase prosecution rates, there needs to be an increased pipeline of cases under investigation. We are replacing Action Fraud with a more efficient new system that will provide better intelligence to forces and piloting new regional fraud investigation teams linked into the City of London Police. The Government is also increasing law enforcement investigative capacity in the City of London Police, as national lead force for fraud, and establishing a new fraud investigative function in the NCA, as well as creating regional fraud investigation teams in Regional Organised Crime Units. This new capability, driven by a new tasking and coordination process run by the National Economic Crime Centre, will target the most complex and serious fraudsters, meeting a manifesto commitment to create a new national cybercrime force, focused on fraud.

The experience of the impact and prosecution of fraud among those working in the legal system and victims of fraud

Fraud can have a devastating impact on victims extending beyond financial losses, with some suffering serious and long-lasting emotional harm. Fraudsters can be extremely sophisticated and will exploit any means they can to trick innocent people out of their hard-earned money.  

In the year ending June 2021, the Telephone Crime Survey of England and

Wales (CSEW) estimates there were 3.9 million adult victims of fraud, one in 12 adults. Many victims do not recover their money with over a quarter of frauds, around 1,324,000 incidents, leading to a financial loss with no or only partial reimbursement. Findings from the CSEW indicate that in the year ending March 2020, around three quarters of fraud incidents resulted in an emotional impact for the victim. In 8% of cases victims were emotionally affected ‘very much’. The most common forms of emotional impact were annoyance, anger and shock. Smaller proportions of victims experienced more serious emotional reactions, such as anxiety or panic attacks, fear and depression. 

The Home Office is working across government, law enforcement, civil society and the private sector to better protect the public and reduce the impact of fraud on victims. Improved victim support will be a key element of the Fraud Action Plan. 

Plans to tackle rising instances of fraud, particularly the rise of fraud facilitated online 

We are deeply concerned about the growth and scale of online fraud, and the devastating financial and psychological impact it can have. ONS estimate that  approximately 53% of all fraud is online-enabled but this figure could be even higher. We continue to work closely with the tech industry to close down the vulnerabilities that fraudsters exploit and ensure members of the public have the information they need to spot a scam.  

Fraud has been brought into scope of the Online Safety Bill to better protect  the public  from online scams through innovative and comprehensive measures. The Joint Committee recently published their report on the Bill, and we are scrutinising this closely to make sure we comprehensively address their recommendations.  DCMS will shortly be consulting on what regulation is needed to make online advertising safe.

This is part of a collaborative effort by the government to tackle online fraud, working with law enforcement, regulators, industry and consumer groups. The Online Fraud Steering Group (OFSG) is a public-private group focused on reducing the threat from online/cyber enabled-fraud in the UK. It reports into the Joint Fraud Taskforce and is co-chaired by the National Economic Crime Centre (NECC), UK Finance and techUK.  

As part of our departure from the EU, the Government removed an exemption to the financial promotions regime available to online platforms for incoming electronic communications from the EU. The FCA is looking into the position of all social media platforms to ensure their processes comply with the new law and will take action, if necessary.

What can be done to make it easier to investigate frauds conducted on the UK public from abroad?

As technology has evolved fraud has become an increasingly borderless crime, and the scope to target UK nationals from overseas has expanded significantly. In order to more effectively investigate fraud conducted on the UK public from abroad, it is vital we have a good understanding of the key source countries of fraud to the UK.

We are working closely with law enforcement to analyse UK fraud reporting, and develop a more solid understanding of the extent to which UK victims of fraud are being targeted by criminals overseas. A better understanding of key threat countries will enable UK Government to pursue more targeted work with partner countries to cut fraud off at source, and provide law enforcement with greater levels of intelligence to guide their prioritisation of overseas investigations. Most recently City of London Police have worked with the Ghanaian authorities to target suspects defrauding UK victims, leading to over £150,000 being repatriated to UK victims of romance fraud.  

More broadly, we will be working with law enforcement partners and wider stakeholders to identify opportunities to strengthen information sharing processes in relation to frauds conducted on the UK public from overseas. This includes working closely with the National Crime Agency, who’s UK Financial Intelligence Unit (FIU) shares and receives operational intelligence data with partner FIU’s across the international community.

Progress in relation to the Government’s Fraud Strategy and the Crown Prosecution Service’s Economic Crime Strategy.

We are taking a systematic approach, deepening our understanding of how fraudsters operate, reducing the opportunity for them to target our country, and ensure that law enforcement has the skills and ability to catch and bring to justice those who seek to defraud the people who live and the businesses that operate here.

In July 2019, we published the Economic Crime Plan, setting out how the public and private sectors would work together to confront economic crime. We have backed the delivery of the plan with over £80 million dedicated to tackling economic crime. To tackle fraud, we have provided £25 million funding to support Action Fraud, creating the capacity to investigate fraud, and improve the skills within the police to address it. This also funds improved intelligence gathering in the NECC, as well as Active Fraud Defence within the National Cyber Security Centre. 

In February 2021, the Home Secretary chaired a meeting of the Economic Crime

Strategic Board and announced an ambitious framework for a public-private Fraud Action Plan. Oversight of the development and implementation of the plan is performed by the Joint Fraud Taskforce (JFT), which was relaunched by the Home Office in October 2021 and is chaired by the Security Minister. The JFT brings together key government, law enforcement and private sector partners to tackle fraud through the Fraud Action Plan and other initiatives such as the Fraud Sector Charter programme.

The plan will form part of a strategy that will be published in 2022. It will commit key partners in the public sector and industry to do more to tackle fraud, focussing on restricting opportunities to commit fraud, pursuing and disrupting fraudsters, increasing public awareness and strengthening victim support. 

In total the SR21 settlement and the Economic Crime Levy represent an overall package of circa £400 million to tackle economic crime over the next three years. The HMG investment within this package will enable an additional uplift in our end-to-end response to combatting fraud.

February 2022