Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps his Department is taking to address banking fraud; and what assessment his Department has made of the effectiveness of those steps.

The Government takes fraud very seriously and is determined to make it more difficult for fraudsters to operate.

The independent financial services regulator – the Financial Conduct Authority (FCA) – requires banks to maintain effective systems and controls to prevent the risk that they might be used to further financial crime. This includes controls to prevent fraud. Under the Money Laundering Regulations firms must carry out customer due diligence measures to identify customers and check that they are who they say they are. If the FCA found evidence that a regulated firm did not undertake appropriate due diligence checks, that firm would be in breach of the Money Laundering Regulations and the FCA could consider what regulatory tools might be appropriate under such circumstances.

The Government also supports the work that the Payment Systems Regulator (PSR) is driving forward, in conjunction with industry, consumer groups and other regulatory and Government bodies, to tackle Authorised Push Payment scams, in which individuals are tricked into sending money online. In April this year, the PSR established a Steering Group of financial institutions and consumer representatives to develop an industry code to help prevent these kinds of scams. In September, the Steering Group published the draft code for consultation and intends to finalise the code in early 2019.

It is also important that victims of fraud are provided with adequate support, and that the public is equipped with the information they need to spot a scam and stand up to fraudsters. That’s why the Government has invested in a new IT system for Action Fraud, which is the UK’s national reporting point for fraud and cybercrime. This new system will deliver significant improvements, both for victims reporting fraud and cybercrimes, and for law enforcement in investigating these crimes.

The banking industry has also taken important steps to prevent fraud, including through the Banking Protocol - a rapid response scheme through which branch staff can alert police and Trading Standards to suspected frauds taking place. The system is now operational in every police force area and in the first six months of this year prevented £14.6 million in fraud and led to 100 arrests.