‘The government shouldn’t pull its punches when tackling financial scams’

interactive investor comments on Treasury committee’s Economic Crime report.

The Treasury Committee’s recommendations include:

• The government should include measures to address fraud via online advertising in the Online Safety Bill.
• The government should ensure that financial services advertising regulations apply also to online companies, and that the FCA has the necessary powers to effectively enforce the regulations
• The government needs to legislate to give the Payment Systems Regulator (PSR) powers to make reimbursement mandatory for bank transfer scam victims. 

Myron Jobson, Senior Personal Finance Analyst, interactive investor, says: “The government should not pull its punches when tackling the scourge of financial scams which has mushroomed in recent history. Unfortunately, there isn’t a silver bullet solution, but the report outlines a number of sensible steps that can be taken to help plug the flood of financial scams.

“The committee is absolutely correct in demanding that financial services advertising regulations apply also to online companies and for the government legislate to make reimbursement mandatory for bank transfer scam victims.

“Banking institutions should also be forced to come clean on reimbursement levels for victims as the current system clearly wasn’t working. Most major banks have signed up to a voluntary code stating that they will reimburse customers who have done all they can to avoid falling victim to scams. But the Financial Ombudsman Service says it is continuing to uphold around three quarters of “authorised” scam complaints in the consumers’ favour which suggests that the code isn’t fit for purpose.

“In addition to pounds and pence financial loss, online scams have a broader psychological and emotional impact of financial fraud that can linger and cause distress well after the scam is over. Financial scams are increasingly sophisticated and there needs to be far more support for people, with better, more consistent treatment. But the onus is on individuals to avoid falling prey to financial fraud – there is no getting away from it. We all need to be on our guard.”