Plans are in place to introduce new legislation banning cold calls on all financial products in a bid to protect consumers from fraudsters. There is already a ban on cold calls from personal injury firms and pension providers, but the new rules seek to expand those restrictions to include all financial products. This would effectively mean that anyone receiving a cold call offering them any type of financial product can be confident that the call or text is a scam.

However, with research by regulator Ofcom showing that more than 40 million people in the UK were targeted by scam calls or text messages and billions lost to fraud already, are these plans too little too late?

The opposition parties in Parliament seem to think so. Both Labour and the Liberal Democrats have criticized the slow pace of change by the government and the impact on thousands of victims who have already fallen prey to financial fraud. 

What Exactly Are The Plans?

The government is proposing to reduce financial fraud by addressing it at source and pursuing perpetrators wherever they may be. A new national fraud squad consisting of over 400 officers whose priority will be tackling fraud is to be created within the police. SIM farms which are
used by fraudsters to send text scams en-masse will be banned. In addition, anyone sending large amounts of text messages will need to be registered. As a result, the government hopes to put more fraudsters behind bars through better investigative and prosecution processes for digital and fraud offences.

In addition, cold calls on financial products will be banned and new powers will be created to take down fraudulent websites. The reforms also propose changes to legislation so that more victims of fraud get their money back. Investment has already been put into creating strong customer
authentication checks when payments are made online and bank staff have been trained to notice when customers are about to fall victim to fraud. The government is also looking to make the tech sector put more consumer protections in place with tougher penalties for non-compliance.

What Does This Mean for Consumers?

For consumers, the proposals should offer more protection against financial fraud and better redress solutions for victims. Online and financial fraud currently accounts for 40% of all crime in
England and Wales, which translates to one in every 15 adults being a victim of fraud. The government aims to reduce those levels by 10% by the end of 2024. 

Advances in technology mean that there are new ways for criminals to target vulnerable people such as those living with conditions such as dementia.

Lastly, the commitment to working with the financial industry to find solutions as well as the additional resources in funding and 400 extra specialist officers should also help reduce fraud and increase consumer protections.

Too Little Too Late?

Industry insiders and campaign groups have welcomed the government’s plans to ban all cold calls, with many describing the proposals as a step in the right direction. However, the government has also been held to account for the slow pace of change and what opposition parties see as a fudging of the numbers of actual victims of financial fraud.

Scammers have become so sophisticated, even the savviest of consumers can be caught out by scams. For example, victims of pension fraud lost up to a staggering £75,000 on average. And despite increased public awareness, fraud still costs the economy £7 billion each year and is a
main source of funding for organised crime. So while the new proposals are better late than never, for anyone who has already fallen victim to fraud and lost their hard-earned money as a result, the new plans may be coming too little too late.