Car Insurance Industry: Fraud

Wednesday 22nd April 2026 Westminster Hall

16:46

[Helen Morgan (North Shropshire) (LD)]

I beg to move,

That this House has considered the matter of fraud in the car insurance industry.

It is a pleasure to serve under your chairship, Ms Lewell. Before I start, I thank the Minister; the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier); and my hon. Friend the Member for Honiton and Sidmouth (Richard Foord) for being here to respond to the debate. This issue cuts across several Departments, and my main ask is for a co-ordinated response to it across Government.

I will touch on many types of fraud in the car insurance industry, but I want particularly to draw the Minister’s attention to paid ad spoofing, which came to my attention after a constituent fell afoul of the scam. Because their case is yet to come to court, I cannot give any specifics of it—I can reassure you, Ms Lewell, that I have checked the content of my speech with the Clerks—but it is typical of the problem.

On its website, the Association of British Insurers describes paid ad spoofing as follows:

“Paid Ad Spoofing involves scammers who use paid advert spoof websites to appear at the top of search engines usually to trick drivers into thinking they will be directed to the website of the genuine insurer. Scammers target motorists when they’re most vulnerable after road traffic accidents. When a driver uses their smartphone to start initiating a claim from the roadside, they may be directed to the website of an unscrupulous firm instead of their insurer. Scammers will ask for personal details to provide ‘support services’ and potentially make a claim. They use psychological tactics to befriend, reassure and pressure victims, while all the time collecting personal information for financial gain.”

Let us imagine a scenario: you are driving along in a blame-free manner, and some idiot pulls out of a side road and hits you. It is unfortunate, but these things happen. Nevertheless, you are very shaken up. You both pull over and agree to swap insurance details. If your car is not moveable, you will need to arrange for it to be towed away. You do not have your insurance details on you, but you know the company you are insured with, so you google their phone number. You see your insurance company and its logo at the top of the results. You ring and you get through to someone who sounds very sympathetic, and they arrange to tow your car away.

Over the next few days, you are repeatedly in touch with them. They convince you that you need to hire a car, they sort out your repairs and they send you paperwork to sign for all those things. At no point do they tell you they are not your insurance company, but the reality is that they are not, and the fees that have been racked up for the tow truck, the repairs and the car hire are potentially excessive. They may also have invited you to see a doctor, maybe in a hotel or other obscure location, and convinced you that there is a valid claim for whiplash or other injury as well.

What is the problem with all this? Basically, behind the fake ad is an organisation that will claim for all these costs in a court case, based on the fact that it was not your fault. If they lose that court case, you are on the hook for the exorbitant costs. On top of that, you will have had an accident and failed to tell your insurance company, and there are potential legal ramifications of that as well.

I have been shocked to find out that there are qualified solicitors working for no win, no fee firms involved in this type of scam. These firms are fully registered with the Solicitors Regulation Authority. How can that possibly be ethical? It is clearly dishonest, and for that reason I would argue it is barely legal.

[Peter Swallow (Bracknell) (Lab)]

The hon. Lady is setting out an extraordinary situation. I want to draw her attention to another real challenge facing drivers: collisions with people who are not insured. Uninsured drivers cost the economy £1 billion a year, and they are disproportionately likely to be involved in collisions, speeding and hit-and-run incidents. That is why I introduced a ten-minute rule Bill last year to increase penalties, and I was delighted to see the Government take up that call for action in their road safety strategy. Is the hon. Lady aware of the massive issue of uninsured drivers, as well as the scams she is reporting on, and does she welcome further action on it?

[Helen Morgan]

I am aware, because I was once hit by an uninsured driver. It is incredibly stressful not knowing how to get the car fixed and whether it is going to be written off. I was very young and did not know how I was going to afford to deal with that problem. I welcome any measures to deal with uninsured drivers. At the heart of this issue is the fact that insurance fraud is not a victimless crime. The victim is put through an extremely stressful time, and everyone else pays through higher premiums. I thank the hon. Gentleman for raising that issue.

Let me return to my point about solicitors, who are supposedly bound by the ethical codes of their regulator. I am a chartered accountant. In every profession, there are individuals who let us down from time to time, but there are clearly described ethical standards to which members of our organisation should adhere. We must undertake annual training on spotting problematic ethical situations, which for an accountant may not always be clearcut.

I know that other professional bodies have a similar approach to this issue—yet a solicitor can work for a firm benefiting from this type of scam activity, and the firm might be fully registered with the Solicitors Regulation Authority. I argue that the SRA needs to up its game, because those individuals are bringing their profession into disrepute, seemingly with the blessing of the organisation that is supposed to uphold standards. Will the Minister have conversations with her colleagues across the Government to deal with this problem? Surely, people in this country should be able to trust a legal professional, and the Government should be taking steps to ensure that the profession has its house in order.

There is a related point: the websites and search engines that host these paid ads are clearly designed to defraud and mislead. When will we hold the tech companies to account for the content that they host? Surely, they should have a duty to do a basic level of due diligence on the ads they place at the top of their search results. The online world is a free-for-all, where some of the most powerful companies in the world absolutely disregard basic levels of morality so long as they are paid. What can be done to introduce some sort of regulation to crack down on fraud and prevent it from happening in the first place—essentially, when it is perpetuated online? The only people who are not paying anything are the owners of the companies that host the problem.

As I said in response to the hon. Member for Bracknell (Peter Swallow), fraud is not a victimless crime. In the case of motor insurance fraud, every driver is paying in the form of increased insurance premiums. When someone is the victim of a scam, they are left shaken, with their confidence knocked, and potentially significantly out of pocket too. My constituent is a retired professional. The realisation that they have fallen victim to a scam has had a profound effect on their self-esteem.

Paid ad spoofing is not the only type of motor insurance fraud. I thank the ABI, Aviva, Admiral and the Association of Personal Injury Lawyers for getting in touch in advance of this debate and providing briefings. Fraud remains the single greatest threat facing the UK, accounting for about 44% of all crime reported in England and Wales. It continues to pose a serious and systemic challenge to the insurance industry, and ultimately to honest motorists and consumers who are forced to pay the price.

In 2024 alone, £1.16 billion of fraudulent general insurance claims were identified, which was a further increase on the already staggering £1.14 billion detected the year before. Motor insurance remains the area most affected, with insurers uncovering more than 51,700 fraudulent motor claims worth £576 million. That is 5% higher than in 2023 and represents more than half of all detected insurance fraud.

The ABI has written to me to say that insurers are investing heavily to tackle the problem. Its members spend more than £200 million each year to combat fraud, including funding the Insurance Fraud Bureau, which leads the fight against organised insurance crime, and the insurance fraud enforcement department in the City of London police. Unsurprisingly, motor insurance fraud is the most prominent focus of investigation and enforcement activity. However, I argue that, in the case of paid ad spoofing, where there are properly registered firms clogging up the courts with excessive claims that could have been sorted out through the normal insurance settlement process, those organisations are operating in plain sight. I urge fraud specialists to investigate that.

Other types of fraud are equally serious. One of the most concerning trends is the rise of ghost broking, which is a crime where fraudsters sell fake or invalid car insurance policies to unsuspecting customers. Criminals obtain policies using false information to reduce premiums, then manipulate documentation to make those policies appear legitimate. The consequences for their victims are severe. Many believe that they are fully insured, only to find that they hold no valid cover under UK law. That often only comes to light when they are stopped by the police or attempt to make a claim following an accident. Drivers caught without valid insurance face vehicle seizure, potentially unlimited fines and even driving bans. Victims are then left to cover repair costs themselves and find new insurance, often at a much higher premium.

Although ghost broking was once carried out face to face, social media has transformed its reach. Fraudsters now routinely target people online, with younger drivers particularly at risk. That group are more likely to seek cheaper insurance options and engage with sellers via social media platforms. The scale of the problem is deeply concerning. Data published by Aviva in November 2025 shows that ghost broking cases have risen by 22% over the past two years. Almost one in three people surveyed reported buying car insurance through social media, and 84% of those who purchased a fake policy online suffered serious negative consequences, including police intervention and identity theft.

On average, those victims lose around £2,000, excluding the additional costs of fines, vehicle seizure, legal consequences and higher future premiums. That is a heavy burden to place on people who believed they were just doing the right thing. Again, the social media and online companies who host those adverts are the only ones not paying the price. I repeat my concern that this area is effectively unregulated.

As I have said, fraud is not a victimless crime. It drives up premiums for everyone and leaves individuals facing financial and legal consequences through no fault of their own. Tackling it effectively requires robust enforcement, proactive investigation and a willingness to change harmful practices wherever they occur, particularly when they are happening in full view of the system.

In the interests of time, and because many of them have been well rehearsed over the years, I have not touched on the other types of fraud for which we all must pay: fake claims, orchestrated crashes and even inflated claims, which large numbers of people admit to even though it is a criminal offence. I look forward to hearing from the Minister, particularly regarding the unethical practices of some in the legal profession and the steps that can be taken to prevent online giants helping to perpetuate this problem. I particularly look forward to her describing how we can look at this problem across Government, because I fear that it is falling between the stalls of the various Departments that have an interest in it.

16:59

[Jim Shannon (Strangford) (DUP)]

It is again a pleasure to serve under your chairship, Ms Lewell. We are going for a hat trick this afternoon, and we are on a roll.

I thank the hon. Member for North Shropshire (Helen Morgan) for allowing me to come and highlight the pressures my constituents are facing. I thank her for her incredibly detailed speech. I will give some stats for Northern Ireland—I always give a Northern Ireland perspective—so that hon. Members understand why the issue of fraud in the car insurance industry is so important to us.

We are often told that the high cost of living in Northern Ireland is a product of global markets or unavoidable inflation, but there is a hidden tax on our driveways: a fraud premium that every honest motorist is forced to pay. Fraud is not a victimless, white collar crime; it is a systemic crisis that is pricing our citizens—especially our youth—off the road.

Let us look at some of the cold, hard facts from Northern Ireland. The 2025 Police Service of Northern Ireland annual report showed that motor insurance was the single largest motoring offence group detected in the last year. We are talking about 6,453 detections—17%, or nearly a fifth, of all motoring offences in Northern Ireland, which gives hon. Members an idea of the problem. Behind that number are thousands of people who think it is acceptable to drive without valid cover or to lie on an application to save a few pounds, but saving a few pounds for the individual means a massive loss for the collective—for everyone else.

Across the United Kingdom, motor insurance fraud is a staggering £576 million industry—that is massive. In practical terms, it adds roughly £50 to every single one of our premiums. That is £50 stolen from our pockets by ghost brokers on social media, those who front the policies and those who stage crash-for-cash scams. The situation in Northern Ireland is particularly dire. Although England and Wales have seen some reforms, we remain a litigious outlier. A shocking 40% of claims in Northern Ireland reach the courts, compared with just 3.5% here in the mainland. The environment of high legal costs and high settlements creates a perfect storm for fraud to thrive.

The real victims are not the big insurance corporations, but our young people— people such as my grandchild, who is just starting to drive. As of January 2026, the average premium for a young driver in Northern Ireland is £1,470. That is for third party, fire and theft; fully comprehensive insurance is over £3,000, with a black box—a box in the car that tells the company if the person is doing something they should not be doing. If they do something they should not be doing, their insurance is withdrawn. Those are the second highest premiums in the whole of the United Kingdom, surpassed only by London. We are effectively telling our young people and students that mobility is a luxury that they can no longer afford, because we have not clamped down hard enough on the dishonest few.

We cannot continue to treat insurance fraud as a victimless shortcut. It is not—the stats tell us that. In Northern Ireland, many young people want to drive but find that the premiums are too expensive, never mind the cost of the car. It does not matter how expensive the car is; if they get third party, fire and theft, the whole cost is in their insurance. That is a drain on our economy, a burden on our police and a direct tax on the honest driver.

I believe, as the hon. Member for North Shropshire said, that it is time for stricter enforcement, better education and a refusal to accept that fraud is just part of the system. The Government must prosecute to the fullest extent of the law all those who have broken the law and who have driven up prices for law-abiding citizens. We must also stop the insurers from capitalising on this through higher premiums, but that is a debate for another day.

17:04

[Mr Luke Charters (York Outer) (Lab)]

It is a pleasure to serve under your chairship, Ms Lewell. I genuinely thank the hon. Member for North Shropshire (Helen Morgan) for securing the debate. I will confine my remarks to ghost broking, which she referred to. I gave a speech on that subject at the Association of British Insurers last year, and I have a keen interest in it, given that I had a career in counter-fraud.

The first point that I want to make is about the nature of the phantom protection that consumers so often receive when they purchase ghost car insurance cover. I am increasingly concerned about the use of AI in fabricating insurance documents. They look genuine to many consumers, so we really must ensure that there is consumer awareness around such uses of AI.

I am also concerned that, with ghost broking in particular, there are some instances where it is operating at scale. It is not just the product of a few rogue actors operating from their basements, or something like that; often, it is a systematised attack used by organised crime groups to target vulnerable groups. I will talk next about what I see as systemic predation and the predatory behaviour of some of these ghost brokers.

Let us imagine a young driver, aged about 17 or 18. They might have a little C1 or another small car, something with a 1.0 litre engine, and they might have their very first job after leaving home—a job that they depend on for their way of life and livelihood. They need that car to get to work. We all know about the very high premiums that young drivers face, so many of them unfortunately fall into the hands of ghost brokers. They face many different losses: not only the loss of their premium but, if they were to unfortunately become involved in an accident, the consequences for their personal finances. The effect of uninsured driving is very much a double whammy, especially for young drivers in such circumstances.

We heard from the hon. Member for North Shropshire that these ghost brokers increasingly operate on social media. I really believe that the Financial Conduct Authority can go further, with Ofcom and some of the social media platforms, to call out that behaviour. There is a conversation to be had about the verification process that social media platforms go through when they receive advertising revenue. Those platforms—be they Meta, TikTok or whatever—should not be making money from ghost broking ads.

The ABI was spot on in trying to create greater consumer awareness of this problem. I invite my hon. Friend the Minister to join me in saying a very common Yorkshire phrase: “If it’s too good to be true, it probably is.” That really applies to many of the policies sold by ghost brokers. The ABI has called for greater consumer awareness of the risk of ghost broking, and I encourage my hon. Friend the Minister to join me in supporting that call today.

I am concerned about the statistics from the ABI that show an upward trajectory in ghost broking—for example, there has been a 22% increase in ghost broking over the last couple of years. In addition, there are over 50,000 motor insurance scams, worth half a billion pounds in total, and up to half of all fraudulent claims could feature some aspect of ghost broking. Really staggeringly, around three in 10 young drivers have purchased insurance from illegal sellers on social media, and the average loss per victim is around £2,000, even though an annual premium is obviously less than that. This means that, for many years, many drivers have been going about on the roads uninsured.

The final issue with ghost broking that I want to talk about is the “second wave” that I have heard about anecdotally from those in the sector. Once the ghost broker is there, then, like a vampire, they have got their victim and they steal some of their identity. They then resell that identity, or part of it, for the purposes of identity theft later on. Not only have uninsured drivers, including young drivers, bought the ghost broker’s policy—that is, they lost their premium and have been uninsured; they may even have been in an accident or whatever—but some years down the line, they might become a victim of identity theft too.

We must have a conversation about having a specific offence of identity theft. Although this does not relate to car insurance, I will briefly tell Members the story of a constituent who served abroad in the armed forces and who had his identity stolen. He found out that mobile phone contracts had been taken out in his name, and I worked with him to get his credit file back on track and to get some of this expunged—some of the credit reference agencies were very slow in righting this wrong.

In the end, there was no financial loss to my constituent, but it had a big impact on his life. He was serving overseas and his credit file had been wrecked; when his partner then found a perfect family home for them, he unfortunately realised he could not get a mortgage. He had come back from deployment, and he knew he would be in the UK for a year or two, so he wanted to use that time to settle into a family home. That was his dream—he had been apart from his girlfriend for some time—but he could not do that because his credit file had been wrecked. I had to sort that out with him, and it was all the consequence of his identity having been stolen.

Identity theft is not a victimless crime. It is particularly acute when it comes to car insurance, but we must tackle it in all its forms. As part of the next iteration of the Government’s fraud strategy, I would welcome a specific offence of identity theft. The Computer Misuse Act 1990 is a broad vehicle according to some of the police I speak to, and it would be beneficial to have a specific offence of identity theft.

[Peter Swallow]

At the start of his speech, my hon. Friend mentioned the involvement of AI in this. That issue was raised with me by the Thames Valley police roads team, which said it is now quite possible for uninsured drivers to use AI to generate a fake insurance document at the roadside, and in that way to prevent the police from tackling this crime. I detect that my hon. Friend may know more about this than me, so I encourage him to say a little more about it before he wraps up his excellent speech.

[Mr Charters]

I thank my hon. Friend for drawing attention to that example. Large language models can be in one’s pocket, and such documents can be generated even without internet connectivity. When I was in the counter-fraud sector, I used some of the AI models that criminals had in order to create hypothetical, fabricated documents. My team created some of those documents—bank statements and identity documents—and showed them to me alongside real documents—and I, an experienced fraud practitioner, could not tell the difference with my eyes. We are now having to use digital tools to detect AI manipulation; sometimes the eye of the beholder is insufficient to detect that a document has been fabricated by AI. As a fraud practitioner, one has to stay one step ahead of the fraudsters. I invite the police to think about how they could do that, using AI themselves to detect documents fabricated by AI.

It has been a hearty discussion today. I call on the FCA to work closely with Ofcom and social media companies to quickly put a stop to the revenue connected to many of these ads, because that would curtail a lot of this activity. We have to have much greater verification in place when it comes to ads relating to insurance, and the social media platforms have to do something very simple: check that the originator of the ad is actually registered by the FCA.

I hope that some of these straightforward calls can be answered, and that the Minister will join me in saying that if something is too good to be true, it probably is. We need greater consumer awareness when it comes to car insurance fraud more generally.

17:14

[Richard Foord (Honiton and Sidmouth) (LD)]

It is a pleasure to serve with you in the Chair, Ms Lewell. I pay tribute to my hon. Friend the Member for North Shropshire (Helen Morgan) for securing the debate. The cases she referred to make the point that everybody’s insurance premium is going up as a result of this terrible activity.

I am grateful for the opportunity to raise the issue of fraud within the car insurance industry more broadly, and not just ghost brokers, which have been referred to already. I want to look at this issue through the lens of a constituent’s case that is all too real.

In July last year, Nicholas, from Cullompton, had his Škoda Octavia parked outside when another driver reversed into it. The damage was noticeable, but it was fairly minor: a golf ball-sized dent to the bumper and a cracked number plate. The car had been knocked forward no more than 12 inches from where it was parked.

[Emma Lewell (in the Chair)]

Order. Could the hon. Member reassure me that there are no ongoing legal proceedings in relation to the case he is referring to?

[Richard Foord]

Yes, I can.

The car was damaged, but thankfully the third-party driver did exactly the right thing: they came forward immediately with no dispute, no exaggeration and no injury. Like anyone else in this situation, Nicholas contacted his insurance company to arrange for repairs, and the insurer appointed a mechanic from a local partner in Exeter, who took up the job.

At the mechanic’s premises, Nicholas signed a form allowing a visual inspection of the car. There was no need for the car to be taken apart, so he was shocked four days later to be sent photos of his car in pieces, with parts having been stripped off. What should have been a simple repair job ended up being a nightmare for Nicholas and his wife, who were provided with a suspicious inspection document marked up with supposed football-sized dents that did not exist.

Nicholas and his wife were told quite bluntly that the car was a write-off and that it was destined to be scrapped. That raised alarm bells for Nicholas, as he knew there was nowhere near that much damage and he had taken photos at the time of the incident to prove it. He told the mechanic who brought him the document that whoever had made the assessment needed their eyes tested. In response, the mechanic chuckled and said he could only tell him what he had been told.

Nicholas was running out of options, due to the insurance company’s refusal to hear him out, but he wanted to save his car from the scrapyard enough that he got in touch with my casework team. When we got in touch with the insurer, it was suddenly prepared to arrange for a second opinion. The independent assessor found that the car was indeed not a write-off and could be repaired; in fact, they revealed that the original assessment, which had amounted to £3,600, included a respray of the bonnet and the replacement of a towbar—Nicholas was not aware his car even had a towbar. Following that second opinion, the cost was reduced to less than £2,000—much less than the initial estimate. Nicholas is still driving his Škoda today; it is unaltered, roadworthy and in much the same condition as when the insurance company claimed it needed to be scrapped. He will continue to do so for the next four or five years, and good on him. My car is approaching its 20th birthday next year and has 207,000 miles on the clock.

So what went wrong for Nicholas? Well, at best this was negligence, but at worst it raises troubling questions about incentives in the system. Are insurers or their contractors advantaged financially by declaring vehicles to be write-offs? Do customers face premium increases simply for having a write-off claim on their record? And why was the insurance company so willing to challenge my constituent when his extensive photographic evidence ought to have been enough?

Nicholas pursued those questions through a complaint to the ombudsman; after four months of chasing, he was merely offered £100, with no comment regarding the case. By its own admission, the ombudsman is plainly overburdened, but delay and process congestion cannot justify failing to interrogate in this case.

The insurer was Saga, whose slogan is “Experience is everything”. My constituent’s experience tells of his own saga—a saga of insurance companies deferring to third-party contractors and of customers pressured to submit false classifications. We need greater oversight to ensure that insurers properly audit the firms they commission. There must be greater transparency around write-off decisions, including mandatory disclosure of financial incentives tied to total-loss classification. We must ensure that the ombudsman has the resources and the duty to examine evidence rigorously.

This debate is plainly not about one car, one insurer or one constituent. If practices like this are occurring across the country, we must act to restore trust in the system, because everybody’s insurance premium will otherwise be pushed upwards.

17:20

[Mark Garnier (Wyre Forest) (Con)]

It is a great pleasure to serve under you this afternoon, Ms Lewell, and I thank the hon. Member for North Shropshire (Helen Morgan) for securing this important debate. We have heard quite a lot of depressing stories about how people have been scammed and ripped off, and all colleagues will agree that more needs to be done to tackle fraud and spoofing in the car insurance industry.

Whether it is crash-for-cash scams, ghost broking or paid ad spoofing, our constituents are all being ripped off on so many levels; not just the cost itself, but the increase in insurance premiums. These practices are also harming the insurers and our wider financial services industry. The Minister will therefore agree with everyone in the room that more needs to be done to tackle this problem, but I hope she will reflect on colleagues’ comments about whether the Government are actually going far enough to tackle it.

To give some context, fraud is a threat that is becoming more prevalent every year. In 2024, fraud accounted for 44% of all crime reported in England and Wales, with about £1.16 billion of fraudulent general insurance claims identified. On the car insurance industry specifically, a 2024 report from the Association of British Insurers said:

“Motor insurance continues to be the area where insurers see the most illicit claims occurring, and they detected 51,700 motor scams worth £576 million.”

The ABI’s data suggested that that accounted for 53% of all fraudulent claims that year. It is safe to say that there is an issue that needs to be rectified, that we need to do more to protect our constituents and that we need to work closely with the industry to resolve this issue.

The thrust of this debate is paid ad spoofing, which is a very problematic but less well-known practice affecting the car insurance industry. According to the ABI, four in five people have never heard of it, so it is welcome that we have the opportunity to discuss it and raise its profile today. As the hon. Member for North Shropshire set out, paid ad spoofing is when fraudsters mimic legitimate businesses. They pay for ads to appear in search results when a customer searches for a legitimate service.

In the context of car insurance, the ads usually refer to unscrupulous claims and accident management businesses, and tend to relate to those who have been involved in an accident. As Direct Line states, the practice relies on

“the fact that in the aftermath of an accident, you might not be as vigilant as you’d otherwise be, searching quickly on your mobile and clicking on the first option you see.”

Fundamentally, these organisations are relying on a consumer believing they are dealing with their own insurer. They then arrange various services that the consumer’s insurer would provide, adding more cost to the process. This is all done with the aim of recovering costs from the insurer, but if the insurer challenges the charges, the drivers are the ones left to pick up the bill.

Understandably, those affected—such as the constituents of the hon. Member for North Shropshire—feel ripped off, and the companies that pretend to support them are actually exploiting them. The last Conservative Government understood that, which is why we instructed the Financial Conduct Authority to become responsible for claims management companies in 2019. As a result, firms must be authorised by the FCA to carry out their activities, and repeated violations will result in their authorisation being removed. It also means that customers can escalate complaints to the financial services ombudsman.

However, I understand that accident management activities are currently unregulated, so will the Minister outline whether the Government are considering regulating those activities of claims management companies? I would also be grateful if she could provide an assessment of the resolution process for customers, and whether she thinks improvements need to be made.

The other central issue is how these practices are allowed in the first place. Fraud is often complicated and involves many different actors. Consumers and insurers have a part to play in tackling it, but the actors, such as technology firms and social media platforms, should also bear responsibility; after all, they are the delivery mechanism for this fraud.

We should acknowledge that some technology firms have taken action, and Google is a good example. In 2021, it required companies advertising financial services to demonstrate that they are authorised by the Financial Conduct Authority, which is a positive step. But more needs to be done, and we need a joined-up approach.

The Government’s fraud strategy was an opportunity to do that. Although it is broadly welcome and recognises the role of technology firms in tackling fraud, not one of its action points requires change from them. Could the Minister set out why that decision was taken and what steps she is taking to ensure that responsibility is correctly allocated when it comes to fraud?

Fraud in the car insurance industry is a serious issue, and I am grateful to the hon. Member for North Shropshire for bringing it up. Fraud in general is becoming an issue of national security, and we need to get a handle on it. The Government should continue working with all actors to stop these practices, and we will support them when they try to do so. Consumers also need to remain vigilant to these practices.

I conclude by flagging to my constituents in Wyre Forest the current advice on how to avoid paid ad spoofing. First, people need to check the website’s URL to ensure that it is their legitimate insurer. Secondly, they should save the phone number on their insurance policy document to their telephone. Thirdly, if people are unsure about who they are speaking to, they should hang up and check their insurance details—caveat emptor.

17:25

[The Economic Secretary to the Treasury (Lucy Rigby)]

It is a pleasure to serve under your chairship, Ms Lewell. I am grateful to the hon. Member for North Shropshire (Helen Morgan) for securing the debate and highlighting the impact that fraud can have and the devious tactics that fraudsters use. She also spoke about the interplay between those issues and the legal profession. I will address the people who run such platforms later on. I also want to thank other Members who contributed to this thoughtful and important debate, including my hon. Friend the Member for Bracknell (Peter Swallow), the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for York Outer (Mr Charters), as well as the shadow Economic Secretary to the Treasury, the hon. Member for Wyre Forest (Mark Garnier), and the Liberal Democrat spokesperson, the hon. Member for Honiton and Sidmouth (Richard Foord).

Car insurance is not a luxury; it is a legal requirement. For many businesses and families, it is essential to daily life, whether taking children to school, getting to work or caring for relatives. As has been said, fraud undermines confidence in the motor insurance market. It causes direct harm to consumers and drives up costs across the system. Those costs are ultimately paid by people who do the right thing by driving with insurance, as the hon. Member for Strangford rightly highlighted.

My hon. Friend the Member for Bracknell pointed out that some drivers—far too many, in fact—do not get insurance, but drive regardless, which is a criminal offence. I regret to say that between 2019 and 2024, the cost of claims involving uninsured drivers increased by a huge 37%. As my hon. Friend said, that increases premiums for everyone else. The Government are considering how, in the light of its seriousness, the penalties should be strengthened for that offence. I hope that he can take from what I have just said that the Government take fraud extremely seriously.

Fraud is the largest crime type in the UK. It harms individuals and businesses, as well as costing our economy billions of pounds each year. It is increasingly driven by organised crime and enabled by technology, as hon. Members have highlighted. That is why fraud is a national security priority for this Government, and we will do what we must to protect the public. In honouring our manifesto commitment, the Government published the new and expanded fraud strategy in March, as we have heard. The central focus of the strategy is disruption: denying criminals the ability to commit fraud in the first place by targeting the tools and methods they use to reach victims. That means acting across the system of Government, law enforcement, regulators, financial institutions, technology companies and telecoms providers, because no single organisation can tackle fraud alone.

As part of the strategy, we are investing £31 million in a new online crime centre that will bring together the Government, law enforcement, GCHQ and industry to identify and address the technological enablers of fraud and deliver high-impact interventions. In practice, that means better data and real-time analysis so that we can identify patterns earlier and take faster action. That could mean taking down fraudulent websites, disrupting malicious advertising networks or supporting the freezing of accounts linked to fraud. Alongside that, we have launched a call for evidence on economic crime information sharing. We want to remove barriers that can prevent firms and agencies from acting on intelligence earlier so that suspected scam activity can be identified and stopped before more people are harmed.

Let me turn to paid ad spoofing and fraudulent advertising, which was raised by the hon. Member for North Shropshire. The Government recognise that paid-for advertising is being exploited by criminals to reach potential victims at scale. Spoofed ads are designed to look like they come from trusted brands, insurers, brokers, comparison sites and even public bodies. Those are particularly pernicious examples. As the hon. Member noted, they can be highly convincing. Indeed, to the point made by my hon. Friend the Member for York Outer, they look too good to be true. They can appear at the top of search results and be targeted at people precisely when they are looking for help, as the shadow Economic Secretary explained.

My hon. Friend the Member for York Outer talked about ghost broking. My statistics might well be worse than the ones that he read out, because my understanding is that the Insurance Fraud Bureau thinks that ghost broking increased by 50% in the last two years. Whatever the exact statistic, there is a serious increase in the crime. My hon. Friend also highlighted a troubling example of identity theft and pointed to the links between ghost broking and follow-on activities. The story that he told was hard to hear.

All these things are not just consumer issues, but significant questions of responsibility and liability in the online ecosystem. If criminals can buy their way into prominence through paid advertising, we must ensure that the systems that place and profit from those adverts do not turn a blind eye. That is exactly why the Online Safety Act 2023 places duties on the largest social media platforms to tackle fraudulent adverts on their services. Ofcom is due to consult on those measures later this year. Once implemented, Ofcom will have the power to take robust enforcement action when it finds non-compliance, including fines of up to £18 million or 10% of qualifying worldwide revenue, whichever is greater.

The Government have also launched a new partnership between the Home Office, the Department for Culture, Media and Sport and industry: the online advertising taskforce. The purpose is to strengthen and maximise the adoption of transparency standards across the wider programmatic ecosystem so that bad actors can be identified, disrupted and, when appropriate, prosecuted. That work will report back in early 2027, and the Government have been clear that we will take legislative action within this Parliament if there are not sufficient improvements.

The hon. Member for North Shropshire and the shadow EST referred to claims management companies and legal professionals who associate themselves with such companies, and the links between them and car insurance fraud. The Ministry of Justice leads on elements of that agenda but, in some areas, the Financial Conduct Authority has responsibility. I hope the hon. Member will be reassured by the fact that there is ongoing dialogue on the issue between His Majesty’s Treasury and the MOJ to determine what might be done in this area. I hope she will agree that that addresses some of her important points.

I want to address specifically the link between online fraud and car insurance. Insurance fraud is a serious issue for all the reasons that I have noted, and it has been well covered in this debate. However, it has an interaction with online criminality. The spoofed ads that are used to harvest personal data, misdirect consumers to fake brokers and facilitate scams ultimately feed wider fraud, particularly serious forms of money laundering. The Government are working closely with the industry, regulators and consumer groups to close the gaps that criminals exploit. I should add that the FCA is alive to the issue of ghost broking and is looking into it specifically.

In October 2024, the Home Office launched the insurance fraud charter with key insurance firms to reduce insurance fraud. The charter supports stronger collaboration and shared action to prevent, detect and disrupt fraud, because the more effectively we tackle fraud at source, the more we protect consumers and the integrity of the market.

More broadly, the Government’s motor insurance taskforce, which published its final report in 2025, included actions for regulators, industry and the Government to tackle fraud, given the unfortunate role that fraudulent activity plays in increasing claim costs and, in turn, premiums for all consumers.

It is also important to be clear about the wider framework that supports this work. Financial institutions are required to maintain robust systems and controls to detect and prevent financial crime under the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017. Banks must report certain suspicious activity to the National Crime Agency under the Proceeds of Crime Act 2002, and they may also freeze and block accounts if suspicious activity is detected. We have also recently introduced new rules allowing banks to delay and investigate suspicious payments for up to 72 hours, which supports the interception of suspicious payments, giving firms more time to prevent funds from reaching fraudsters in complex cases and helping to break the spell that fraudsters have over victims. As we have set out in the fraud strategy, we are reinforcing the system-wide response through the Online Crime Centre and improved information sharing so that suspected scam accounts can be spotted sooner and action taken more quickly.

I do not pretend that tackling fraud is simple. Fraudsters adapt quickly, and technology, including some of the technology that we have been talking about today, moves very fast, but the direction of travel is very clear. We are shifting from a reactive model, picking up the pieces after harm occurs, to a disruption model that targets the infrastructure that criminals rely on, including the online advertising routes they use to reach victims.

Through our fraud strategy, the Online Crime Centre, strong action on fraudulent advertising via the Online Safety Act, and further work through the online advertising taskforce, backed by a clear commitment to legislate if necessary, we are taking decisive action to protect the public and disrupt the criminals behind these crimes.

I thank the hon. Member for North Shropshire again for raising these important issues. I reiterate that the Government recognise the importance of car insurance to people’s lives and livelihoods, and we are determined to tackle the fraud that drives up costs for honest motorists.

17:35

[Helen Morgan]

I thank all hon. Members who have contributed to this really interesting debate. The hon. Member for Strangford (Jim Shannon), as always, gave us a perspective on Northern Ireland and the eye-watering impact that the practice has there, particularly on young people. I know Northern Ireland is very rural, so I have some experience of how that feels. People are dependent on their cars, so the problem has a disproportionate impact on his area.

The hon. Member for York Outer (Mr Charters) brought his professional insight into the issue of ghost broking and raised a number of additional issues, which really helped the debate along. My hon. Friend the Member for Honiton and Sidmouth (Richard Foord) highlighted some of the issues around subcontractors used by insurance companies.

I also thank the Minister, the shadow Minister—the hon. Member for Wyre Forest (Mark Garnier)—and the hon. Member for Bracknell (Peter Swallow) for their really encouraging responses. I think everybody is on the same page in taking this issue seriously. The problem is that fraudsters are always one step ahead, but I look forward to seeing the results of the Government’s various measures. In particular, we will look at the interaction between the legal industry and the online industry—for want of a better word—and at how we can keep people safe from their instinct to trust what they can see when, all too often, that is not trustworthy and has been placed there by bad actors.

Question put and agreed to.

Resolved,

That this House has considered the matter of fraud in the car insurance industry.

17:39

Sitting adjourned.