UK 1st Fraud Minister sounded great and reducing Financial Fraud is a major growth opportunity

Rt Hon Lord David Hanson's Special Address on the new government's approach to tackling fraud at Financial 360 was breath of fresh air. Ably supported by Andrei Skorogatov, Home Office, in the prior session of Global Practices covering payment fraud. The goal to revitalise the attack on fraudsters using coordinated and incentivised parties, including Social Media, is to be addressed. A successful outcome would assist the UK economy to grow.

Payment Fraud continues to grow worldwide

UK fraud has doubled in losses and tripled in cases over 10 years. (H1 2025: £629 million stolen across 2.1 million cases up from £320 million and 631,000 cases in H1 2015). The chances of being defrauded through digital technology is 7.5% per annum for anyone older than 19.  Fraud now occurs digitally in seconds.

The divergence between the explosion of cases and money loss suggests fraudsters are casting wider nets, with more frequency and from anywhere.

Key Fraud Patterns and Scale

UK:      75% scams originate from social media platforms.

            75% of scammed payments go international

EU:       €4.3 billion in payment losses (2024)

US:       72% increase in fraud attacks, 21% surge in online fraud activity

Cross-border payments are particularly vulnerable across EU and UK.

Vulnerability

1. Data Sharing

With the increasing growing of fraud, the value of sharing data in stopping scams is now recognised. In Thailand, a Royal Decree now allows sharing of data. SWIFT, working with 10 major banks, is using data along the lines of the 2015 Parliament’s Digital Policy Alliance (DPA) research into stopping fraud across instant payments banks in real time.  

The DPA project was halted. Banks/PSPs did not want to share any information with their competitors. An independent supervised fraud hub was also rejected but the mule networks tracking, after eight were discovered, continued as it provided good intelligence. 

2. Speed and quality of regulations

Within the newly legalised Stablecoin currencies (‘par value pegged’) KYC/AML data timeliness by constant monitoring for the latest information is now mandatory. 

3. Push to fill missing systemic gaps

The introduction of Confirmation/Verification of Payee to include the actual bank account owner is well underway. Previously the entire payment system including SWIFT IBANs did not require the actual owner of the bank account to be named. Hence in the UK scammers would put, for example, HMRC in the Payee box when the sort code and account number belonged to M. Mouse.

4. Technology Payment upgrades

The EU Instant Payments programme in 2027 will change the speed of compliance and fraud prevention. The EU has entered its second phase by awarding €79 million in starter contracts to ensure the digital euro meets EU’s data protection, security, and privacy standards. The technology will use AI to combat fraudsters ongoing/future activities. 

5. Successful UK Bank Rule (Oct 24)

The Payment System Regulator (PSR now FCA) enacted the rule that scammed bank account holders are to be reimbursed by the banks. The impact was immediate with 88% reimbursement (up from 56%). The £150 million annual cost created by not having the customer pay for the scam creates a clear ROI and justification for the Banks/PSPs to implement improved anti-fraud measures.

UK plans on Fraud prevention

Lord Hanson has a three-year plan backed by an initial £79 million to make fraud prevention a priority. He highlighted Operation Hen House: 420 arrests, £7.5 million recovered and a 400-staffed National Fraud Squad. The need is to bring together the elements in the chain – Social Media – Telecoms – Banks/PSP – public education – the Law - by creating incentives for all the industries involved. (see expert’s suggested Incentives in Appendix)

Summary

The appointment of the very first Fraud Minister is much needed and should shake off the long-term malaise around fraud prevention. Banks/PSPs have considered any fraud bad for reputation. When a fraud occurred, it was often handled by senior management to ensure it remained as invisible as possible. Now digitally, fraud occurs in seconds, and much, much more visible through social media such that this course of action is no longer sustainable. 

Banks/PSPs, Social Media, the Law and Telecom industries must adjust to criminals who will mercilessly take whatever money they can by conning people online. It is important to work together as a team and put aside some of the corporate insularity that occurs.  UK with its traditional strength in finance through The City of London can regain a leadership role, as, for example, in the development of Digital Gilts, through action on Financial Crime. 

The challenge is in the execution by coordinating diverse industries with competing interests against sophisticated, international criminal networks operating at digital speed. The 10-year gap since the failed 2015 DPA project suggests institutional barriers are high. Sustained funding beyond the initial £79 million is needed as well as international cooperation for cross-border aspects.

Lord Hanson, the opportunity is real. Fraud prevention would differentiate UK financial services globally. Three years is not long so “God Speed”.

Appendix: Suggested Incentives 

• Banks/PSP – UK’s Payment System Regulator (PSR), Oct 2024, ruled all Banks/PSPs must give back the scammed amount to the innocent bank customer. Up to then it was restricted to the major banks/PSPs. This change resulted in 88% of client’s scammed amounts returned. Up from 56% in 2023 APP category of £460 million (out of total fraud of £1.2 billion).  New cost to the Banks/PSPs industry: £150 million
• Social Media – EU maximum incentive for violating rules and regulations is a fine up to 10% of the holding company’s gross revenue. A similar figure could initiate a change in behaviour.
• Fraudsters – the current lapse between arrest and court appearance is 2 to 3 years. As the ‘tools for the trade’ are readily available - computer, mobile phone and bank accounts the timeframe should be shortened to less than a year.
• Law enforcement– Timeframes and procedures need to be accelerated to reflect the digital criminal activities, reducing the need for lengthy court appearances
• Telecomm Industry – increased exchange of data between each other and accelerate the warning ‘could be a nuisance or scam call’ notice before answering the call.