Follow the money
27 Nov 2024
MPs and industry experts met to discuss how financial services can be made fairer as the ‘Fraud Summit’ was launched
Image: jeanette_teare/stock.adobe.com
Under the shadow of Big Ben and the Houses of Parliament, the all-party parliamentary group on investment fraud and fairer financial services (the APPG) gathered to launch the ‘Fraud Summit’ at Portcullis House.
Members of Parliament listened as members from the industry shared personal stories of loss and levied criticism at regulators.
Bob Blackman, MP for Harrow East, kicked off the summit and was keen to highlight the disparity between the extent of financial crime and the financial efforts made to quash such crime.
Blackman stressed that “to say the topic of fraud is an important topic, would be an understatement. Over 40 per cent of crime in this country relates to financial crime and fraud. Only two per cent of police resources are provided to try and address it.”
The MP introduced the APPG’s purpose as “to advocate for the victims of financial misconduct, crimes, scandals, frauds and regulatory failures, by driving positive, progressive, and purposeful reforms that achieve a fair, trusted and just system”.
He then summarised the purpose. “It is about basically making sure that society is being properly served by the financial sector, and that the many varied agencies and regulators are performing well,” he said, before chuckling. “You may have your opinions on that.”
In order to achieve that fair, trusted and just system, Blackman believes that the industry should be asking a number of questions.
He reels off a list. “What should the authorities be responsible for when it comes to fraud? How do the authorities interconnect? Are there any issues falling between the cracks? What more do they need in terms of additional powers to be effective? And if they need more powers, what have they been doing to try and get them and can we get the governments of the day to actually give them those powers?”
A distant crime
Damian Hinds, MP for East Hampshire, believes that in order to combat financial crime, the industry and society needs to take a step back and assess the larger picture.
“People often think first about pursuing the people who are committing these crimes,” Hinds explains. “But it is much harder in this area, because most crime is what I call proximity crime. In other words, the perpetrator and the victim are not in the same place.”
Rather, Hinds encourages, “you need to think about how you intercept this thing at the point where it is happening. You have to try to stop the fraud taking place. I think the banks and the financial services sector have done some exceptional work in this area to try and help on that.”
Hinds acknowledges the work that a number of asset servicers have done to improve their anti-money laundering (AML) and counter-terrorist financing (CTF) measures. The industry has placed heavy emphasis on improving its AML/CTF measures and the EU has even established an AML watchdog (AMLA) to further strengthen the asset servicing industry’s defence against financial crime.
The Fraud Summit wants a similar governmental department for financial crime in the UK.
A targeted focus
Alexis Conran, host of BBC Three’s The Real Hustle, painted a picture of the scale of financial crime in the UK. He pointed to low-level scams that anyone could be a victim of – be it a ‘dodgy’ text message or a wayward link.
Conran says that this low level criminality is too easily overlooked. “You’ve lost £100, your bank has reimbursed you…let’s move on,” he says.
“But no one is looking at where that £100 has gone. What is that £100 doing?”
James Treadwell, a professor of criminology, believes that combating financial crime can help unravel other strands of criminality as “fraud is the threat that runs through all organised crime.”
Treadwell who believes having a Minister for Fraud, leading a skilled department, could be key to combating financial crime.
“We need skilled financial investigators who follow the money. Following the money is the way you get to the criminals, is where you can largely get to the offenders,” he says.
One of the consistent calls during the APPG meeting was for a minister or commissioner for fraud, to show that the government is putting in suitable measures to curb the threat of fraud and financial crime.
Anthony Stansfield, former Thames Valley police and crime commissioner, says that only having a dedicated department will tackle financial crime.
“We do need a fraud minister who is prepared to stand up and fight and the proper committee behind it,” he notes.
There were ironic jeers when the APPG were reminded that the UK does in fact have a minister who oversees economic crime. Although, under his detailed responsibilities on the government’s website, the Minister of State for Security Dan Jarvis is also responsible for countering terrorism, domestic state threats, cyber crime and serious and organised crime.
The Fraud Summit wants a single, dedicated minister.
Andy Agathangelou, founder of the Transparency Task Force (TTF) and the secretariat for the APPG, offered a personal account.
He shared the story of a TTF volunteer and his friend, Ian Davis, who lost his entire life savings in the London Capital and Finance scandal. Davis died by suicide in 2023.
Agathangelou says: “We remain concerned by the amount of financial crime and fraud that’s taking place. Particularly when fraud results in significant suffering, sometimes even suicide.”
What to do
“I think it’s very disappointing that after all the time I’ve been working on this, we have to come up with a petition to try and show the government that people are not going to stand by this. They’re appalled. They’re going to have to see change,” Margaret Snowdon OBE, a pensions expert and professional explains.
Snowdon has introduced a petition, ‘Call For Fair Tax Treatment for Pension and Investment Fraud Victims’, and calls on the industry to “advocate for stronger protection and right the injustice suffered by historical victims”.
Following the summit, the APPG produced a report on its Call for Evidence about the Financial Conduct Authority (FCA) at meetings in Parliament amid “widespread criticism of the regulator from a range of independent sources, including external reports on the poor handling of the London Capital & Finance, Connaught, Interest Rate Hedging Product and British Steel Pension Scheme scandals.”
Blackman MP explained that “the conduct and performance of the FCA is of great interest to us.” He continued to say that the FCA’s Transformation Programme – launched in response to criticisms – has failed to expel “the FCA’s deep-rooted cultural problems, described so forensically by the series of external reports”.
In a bleak assessment of the role of the FCA’s oversight of the financial services, Blackman concluded: “The Government has reasons for concern in that the trust deficit in financial services is acting as a brake on growth, the opposite of what any administration wants for the economy.”
“Whether the FCA should be reformed or replaced is one of the key questions that the independent panel considered at length - their thoughts, and the evidence their thoughts were based on, will be there for everybody to read on 26 November.”
Members of Parliament listened as members from the industry shared personal stories of loss and levied criticism at regulators.
Bob Blackman, MP for Harrow East, kicked off the summit and was keen to highlight the disparity between the extent of financial crime and the financial efforts made to quash such crime.
Blackman stressed that “to say the topic of fraud is an important topic, would be an understatement. Over 40 per cent of crime in this country relates to financial crime and fraud. Only two per cent of police resources are provided to try and address it.”
The MP introduced the APPG’s purpose as “to advocate for the victims of financial misconduct, crimes, scandals, frauds and regulatory failures, by driving positive, progressive, and purposeful reforms that achieve a fair, trusted and just system”.
He then summarised the purpose. “It is about basically making sure that society is being properly served by the financial sector, and that the many varied agencies and regulators are performing well,” he said, before chuckling. “You may have your opinions on that.”
In order to achieve that fair, trusted and just system, Blackman believes that the industry should be asking a number of questions.
He reels off a list. “What should the authorities be responsible for when it comes to fraud? How do the authorities interconnect? Are there any issues falling between the cracks? What more do they need in terms of additional powers to be effective? And if they need more powers, what have they been doing to try and get them and can we get the governments of the day to actually give them those powers?”
A distant crime
Damian Hinds, MP for East Hampshire, believes that in order to combat financial crime, the industry and society needs to take a step back and assess the larger picture.
“People often think first about pursuing the people who are committing these crimes,” Hinds explains. “But it is much harder in this area, because most crime is what I call proximity crime. In other words, the perpetrator and the victim are not in the same place.”
Rather, Hinds encourages, “you need to think about how you intercept this thing at the point where it is happening. You have to try to stop the fraud taking place. I think the banks and the financial services sector have done some exceptional work in this area to try and help on that.”
Hinds acknowledges the work that a number of asset servicers have done to improve their anti-money laundering (AML) and counter-terrorist financing (CTF) measures. The industry has placed heavy emphasis on improving its AML/CTF measures and the EU has even established an AML watchdog (AMLA) to further strengthen the asset servicing industry’s defence against financial crime.
The Fraud Summit wants a similar governmental department for financial crime in the UK.
A targeted focus
Alexis Conran, host of BBC Three’s The Real Hustle, painted a picture of the scale of financial crime in the UK. He pointed to low-level scams that anyone could be a victim of – be it a ‘dodgy’ text message or a wayward link.
Conran says that this low level criminality is too easily overlooked. “You’ve lost £100, your bank has reimbursed you…let’s move on,” he says.
“But no one is looking at where that £100 has gone. What is that £100 doing?”
James Treadwell, a professor of criminology, believes that combating financial crime can help unravel other strands of criminality as “fraud is the threat that runs through all organised crime.”
Treadwell who believes having a Minister for Fraud, leading a skilled department, could be key to combating financial crime.
“We need skilled financial investigators who follow the money. Following the money is the way you get to the criminals, is where you can largely get to the offenders,” he says.
One of the consistent calls during the APPG meeting was for a minister or commissioner for fraud, to show that the government is putting in suitable measures to curb the threat of fraud and financial crime.
Anthony Stansfield, former Thames Valley police and crime commissioner, says that only having a dedicated department will tackle financial crime.
“We do need a fraud minister who is prepared to stand up and fight and the proper committee behind it,” he notes.
There were ironic jeers when the APPG were reminded that the UK does in fact have a minister who oversees economic crime. Although, under his detailed responsibilities on the government’s website, the Minister of State for Security Dan Jarvis is also responsible for countering terrorism, domestic state threats, cyber crime and serious and organised crime.
The Fraud Summit wants a single, dedicated minister.
Andy Agathangelou, founder of the Transparency Task Force (TTF) and the secretariat for the APPG, offered a personal account.
He shared the story of a TTF volunteer and his friend, Ian Davis, who lost his entire life savings in the London Capital and Finance scandal. Davis died by suicide in 2023.
Agathangelou says: “We remain concerned by the amount of financial crime and fraud that’s taking place. Particularly when fraud results in significant suffering, sometimes even suicide.”
What to do
“I think it’s very disappointing that after all the time I’ve been working on this, we have to come up with a petition to try and show the government that people are not going to stand by this. They’re appalled. They’re going to have to see change,” Margaret Snowdon OBE, a pensions expert and professional explains.
Snowdon has introduced a petition, ‘Call For Fair Tax Treatment for Pension and Investment Fraud Victims’, and calls on the industry to “advocate for stronger protection and right the injustice suffered by historical victims”.
Following the summit, the APPG produced a report on its Call for Evidence about the Financial Conduct Authority (FCA) at meetings in Parliament amid “widespread criticism of the regulator from a range of independent sources, including external reports on the poor handling of the London Capital & Finance, Connaught, Interest Rate Hedging Product and British Steel Pension Scheme scandals.”
Blackman MP explained that “the conduct and performance of the FCA is of great interest to us.” He continued to say that the FCA’s Transformation Programme – launched in response to criticisms – has failed to expel “the FCA’s deep-rooted cultural problems, described so forensically by the series of external reports”.
In a bleak assessment of the role of the FCA’s oversight of the financial services, Blackman concluded: “The Government has reasons for concern in that the trust deficit in financial services is acting as a brake on growth, the opposite of what any administration wants for the economy.”
“Whether the FCA should be reformed or replaced is one of the key questions that the independent panel considered at length - their thoughts, and the evidence their thoughts were based on, will be there for everybody to read on 26 November.”
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