Fraud losses in Britain’s financial services sector reached over $1.5 billion in 2022, according to a study by UK Finance. Although there was an 8% decline from the previous year, the sector still faced 3 million cases of fraud.
Unauthorized fraud accounted for nearly two-thirds of the losses, while authorized push payment (APP) scams, such as invoice or mandate scams and CEO fraud, were also prevalent.
The report emphasizes the need for robust fraud prevention measures, including multi-factor authentication and staff training, to combat increasingly complex fraudulent activities. However, victims of APP scams currently have no legal right to reimbursement in the UK, prompting lawmakers to push for legislative changes to address this issue.
Proposed legislation, the Financial Services and Markets Bill, aims to establish a mandatory reimbursement system for APP fraud. The report highlights the limitations of relying solely on the banking sector for reimbursement, as it lacks financial incentives to prevent fraud.
Under the current voluntary system, reimbursement rates vary, with participating institutions reimbursing about 60% of losses in the first half of 2022, compared to 44% for non-participating institutions.
Overall, the study underscores the ongoing challenges in combating fraud, urging the adoption of preventive measures and the implementation of a comprehensive reimbursement system to protect victims and deter criminals from profiting from fraudulent activities.
