Innovate Finance Sets Out Blueprint to Make the UK the World Leader in Tackling Fraud

Innovate Finance, the industry body for UK FinTech, today releases its anti-fraud strategy to ensure the UK is the safest place in the world to use digital finance.

‘A Technology Strategy to Smash Fraud’ sets out a clear plan to halve fraud in the UK by 2028:

• A world-first data sharing approach across sectors, regulators and law enforcement industry, to industrialise the UK’s use of technology to spot and stop fraud and enable-  all financial firms – large and small – to access and use these solutions. This would build on the existing vibrant small-scale efforts of different data sharing initiatives in the UK. 

• Introduce shared liability for social media and telecommunications platforms for fraud originating on their platforms and networks – where the majority of all frauds take place. This includes strengthening the Online Safety Act. 

• Building a world beating UK anti-fraud tech industry, which can create jobs and growth and export solutions

Fraud has a devastating effect on the UK economy, with the cost of payments fraud at least £1.2 billion annually. The impact of fraud risks not only consumer confidence in digital finance, but also disproportionately affects those on lower incomes, and 70% of victims suffer wider negative impacts including mental and physical health and debt.  

Janine Hirt, CEO at Innovate Finance, said: “Fraud accounts for over 40% of crime but receives less than 1% of police resources. Given the scale of the threat posed to consumers and businesses alike, we urgently need a more collaborative, targeted, and effective strategy that aspires to smash fraud in the UK.  

“This plan sets out how we can harness technology via data sharing to strengthen collaboration between industry and law enforcement. Current data sharing initiatives, while effective, operate in silos, which can make it difficult in practice. Critically, there is nothing in place with the critical mass or scale required to crush organised fraud. There is widespread agreement that establishing a National Anti Fraud Centre would be the appropriate vehicle to deliver this.

“We also need to update our laws, including the Online Safety Act 2023, to make tackling crime a shared responsibility between payment providers and the social media and telecommunications firms that allow fraud to take place on their platforms.  

“By acting now, the UK Government can lead the way in tackling fraud, protecting consumers and reinforcing its position as a global leader in secure and innovative finance.”

Luke Charters, MP for York Outer, said: “The pain and distress caused by fraud are immeasurable, and it cannot continue. Effectively countering this threat requires a coordinated, cross-sector response, leveraging expertise from financial institutions, regulatory bodies, law enforcement, and policymakers alike. To effectively combat fraud at scale, I believe we should establish a national anti-fraud centre. By uniting insights, intelligence, and expertise from across industries, this centre could serve as a formidable force against fraudsters, enabling real-time threat detection and disruption.” 

Establishing a National Anti Fraud Centre 

The strategy calls for the establishment of a new National Anti Fraud Centre that can scale-up, connect and industrialise the range of initiatives in the fraud data sharing space and ensure that these are easily accessible by firms of all sizes. Current initiatives with national crime agencies and industry focus on a few large firms; the strategy outlines how effective fraud prevention requires inclusive, accessible solutions for all stakeholders. This includes:

• Central leadership across the variety of data-sharing initiatives, to tackle fraud at the source and prevent scams from occurring. 
• Effective data sharing, collection, and analysis between finance firms, regulators, law enforcement, technology platforms and telecoms networks – to ensure collective efforts are focused on preventing fraud and ending the asymmetry of data access. 
• Leading an effective and coordinated response to fraud – delivering on the Government’s vision to ensure a coordinated effort across sectors, law enforcement and government.  

The report also discusses the leadership of the Centre, with accountability at the highest levels of Government being a priority, as well as funding it in a way that does not add pressure to the public purse.  

Introducing shared liability to prevent and address fraud

The strategy also calls for the introduction of new shared liability rules to ensure Big Tech social media and telecommunications firms do more and tackle fraud being conducted on their platforms. 

Currently, a significant proportion (77%) of Authorised Push Payment (APP) fraud originates online. Digital social platforms are the single largest source of fraud origination, with data from a  FinTech firm showing that fraud originating from Meta constitutes 60.5% of all reports received. However, it is payment service providers (PSPs) who are currently held solely responsible for reimbursing victims of fraud, leaving a significant responsibility gap and a lack of incentive for social media and telecommunications platforms. 

To deliver on the shared liability proposal – and ultimately reduce purchase scams in payments and other sources – the report calls on the Government to amend the Online Safety Act 2023 to: 

• Introduce a reporting framework – to ensure reported fraud is handled with impartiality, and enables cross-industry data sharing and analysis. 
• Set up a fraud origination redress fund – for telecommunications firms and social media platforms to pay into. 
• Create a distribution mechanism – to issue reimbursements from responsible parties.
• Establish a dispute resolution process – to resolve disputes between social media platforms and telecommunications firms, ensuring the acceptance of shared responsibility does not reach a stalemate. 

Benefits to the UK economy  

The aim of the strategy is to not only reinforce the UK’s international competitiveness as a safe place to invest, but also frames the focus for the UK to develop and export new anti-fraud regulatory technology (RegTech) solutions. The RegTech sector is projected to reach $246.16 billion by 2032 – a significant opportunity for the UK to build a world beating anti-fraud technology sector and reaffirm UK FinTech as a global economic champion.  

As a sector primed for growth, Innovate Finance has emphasised its opportunity as a key driver of economic growth for the UK as well as a lever to help eliminate the significant cost of fraud to consumers and businesses.