Bank chiefs tell Sunak to make big tech bear cost of fraud ‘pandemic’
The bosses of Britain’s biggest banks have told Rishi Sunak that technology companies must contribute to the cost of an online fraud “pandemic” that is undermining international investor confidence in the UK economy.
Sky News has obtained a letter to the prime minister signed by the chief executives of nine lenders, including Barclays, NatWest and Nationwide, in which they warned that the UK has become “a global hotspot for fraud and scams”.
They said the government’s National Fraud Strategy, unveiled last month, were inadequate to tackle the scale of the crisis, which they believe is costing more than £1bn every year to tackle.
The bank chiefs told the PM that £2,300 was stolen from British consumers every day last year by fraudsters.
And they said that they would consider taking further action “to protect our customers” without wider government intervention, including slowing down payments, which they described as “a useful but blunt instrument that will mean some customers and businesses will find their legitimate transactions held up”.
“Online fraud poses a strategic threat to the prosperity of the UK and impacts the credibility of, and confidence in, the economy and financial sector,” they said in the letter, sent on June 6.
They want tech companies to be responsible for stopping scams at source, to contribute to refunds for victims of fraud originating on their platforms and for a public register showing the scale of tech giants’ failure to prevent scams.
The banks’ collective intervention underlines growing frustration at the fact that big technology companies such as Meta Platforms, the owner of Facebook, Instagram and WhatsApp, are bearing so little of the financial burden generated by fraud.
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This week, TSB wrote to the New York-listed company to demand that it polices its social media operations more robustly.
The TSB chief executive, Robin Bulloch, was among the signatories to the joint letter to the PM.
The others were Dame Alison Rose, the NatWest CEO; Debbie Crosbie, Nationwide chief executive; Lloyds Bank Group chief Charlie Nunn; Ian Stuart, boss of HSBC UK; Matt Hammerstein of Barclays UK; Mike Regnier, CEO of Santander UK; Mikael Sorensen of Handelsbanken; and Anne Boden, the outgoing CEO of Starling Bank.
It was also signed by Bob Wigley and David Postings, respectively the chairman and chief executive of UK Finance, the banking lobby group.
In it, they urged Mr Sunak to take further steps to combat “the devastating impact fraud is having on people, businesses, and the UK economy”.
“Online fraud poses a strategic threat to the prosperity of the UK and impacts the credibility of, and confidence in, the economy and financial sector,” they said.
“This should not be seen just as an issue for the UK’s banking sector.
“It is having a material impact on how attractive the wider UK financial sector is perceived by inward investors, which as we know, is critical for the health of the City of London and wider UK economy.”
Billions lost to fraud
The chiefs highlighted a UK Finance report which concluded that £1.2bn was lost to fraud of all kinds last year, and welcomed the appointment of Anthony Browne, the Conservative MP and former British Bankers’ Association chief.
They told Mr Sunak that the overwhelming majority of scams targeting UK consumers “originate with a small number of tech firms, social media firms and telcos”.
“A fraud strategy that fails to mandate action on all actors involved in the fraud journey and collective responsibility for the harm done to consumers, will never be effective.
“We are not confident that voluntary measures to be placed on the technology and telecommunication sectors will deliver the change required to reduce the UK’s attractiveness to fraudsters and prevent harm to customers.”
They complained that banks’ efforts to tackle the issue were being impaired by the Financial Ombudsman Service, which they said had placed a disproportionate burden on their industry.
The bosses also said recent conversations with government officials had not instilled confidence in Whitehall plans to clamp down on fraud.
They called on Mr Sunak to make voluntary measures aimed at the telecoms and tech sectors mandatory, and said they should be forced to educate consumers on the security and data risks of making payments.
Bank chiefs told the PM that £2,300 was stolen from British consumers every day last year by fraudsters
Tech companies should also be obliged to provide more visible warnings to customers, the bank bosses said.
“One area that we believe requires urgent focus is that of the proliferation of purchase scams on META platforms, which is disproportionately higher than its peers,” they said.
“Tech firms, telcos and social media companies should bear responsibility for stopping scams at source and contributing to refunds when their platforms are used to defraud innocent victims.”
The bank chiefs claimed to have spent more than £500m in the last three years “building defences that help us stop more than £2bn a year in attempted fraud”.
Among their other requests to Mr Sunak was that data should be published regularly to name and shame tech companies over the level of fraud originating from their platforms.
“We can all see how these firms harvest user data for advertising revenue purposes: this in turn must offer ways to intervene to protect users from unscrupulous actors,” they said.
The bank chiefs also called on the government to be “more ambitious than the 10pc reduction [in online fraud] it is targeting which would still leave more than two million customers a year suffering harm.
“With collective commitment across the pillars the Strategy could be even more ambitious and aim for a more credible 25pc reduction in fraud.”
Rachel Reeves has said she is determined to “defy” forecasts that suggest she will face a multibillion-pound black hole in next month’s budget.
Writing in The Guardian, the chancellor argued the “foundations of Britain’s economy remain strong” – and rejected claims the country is in a permanent state of decline.
Reports have suggested the Office for Budget Responsibility is expected to downgrade its productivity growth forecast by about 0.3 percentage points.
Rachel Reeves. PA file pic
That means the Treasury will take in less tax than expected over the coming years – and this could leave a gap of up to £40bn in the country’s finances.
Ms Reeves wrote she would not “pre-empt” these forecasts, and her job “is not to relitigate the past or let past mistakes determine our future”.
“I am determined that we don’t simply accept the forecasts, but we defy them, as we already have this year. To do so means taking necessary choices today, including at the budget next month,” the chancellor added.
She also pointed to five interest rate cuts, three trade deals with major economies and wages outpacing inflation as evidence Labour has made progress since the election.
Speculation is growing that Ms Reeves may break a key manifesto pledge by raising income tax or national insurance during the budget on 26 November.
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Chancellor faces tough budget choices
Although her article didn’t address this, she admitted “our country and our economy continue to face challenges”.
Her opinion piece said: “The decisions I will take at the budget don’t come for free, and they are not easy – but they are the right, fair and necessary choices.”
Yesterday, Sky’s deputy political editor Sam Coates reported that Ms Reeves is unlikely to raise the basic rates of income tax or national insurance, to avoid breaking a promise to protect “working people” in the budget.
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Tax hikes possible, Reeves tells Sky News
Sky News has also obtained an internal definition of “working people” used by the Treasury, which relates to Britons who earn less than £45,000 a year.
This, in theory, means those on higher salaries could be the ones to face a squeeze in the budget – with the Treasury stating that it does not comment on tax measures.
Read more: The taxes Reeves could raise
In other developments, some top economists have warned Ms Reeves that increasing income tax or reducing public spending is her only option for balancing the books.
Experts from the Institute for Fiscal Studies have cautioned the chancellor against opting to hike alternative taxes instead, telling The Independent this would “cause unnecessary amounts of economic damage”.
Although such an approach would help the chancellor avoid breaking Labour’s manifesto pledge, it is feared a series of smaller changes would make the tax system “ever more complicated and less efficient”.
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