The Financial Conduct Authority (FCA) has committed to tackling online financial fraud faster as part of its new data strategy. Our latest insight article looks at what the regulator is doing to combat online fraud.

According to crime figures from the Office for National Statistics, there were a total of 5.1m fraud offences committed between September 2020 and September 2021. This is a rise of 36% from two years earlier.

Of the 5.1m victims, over a quarter lost money that was never repaid.

In 2021 the FCA issued a record 1,300 consumer warnings, as it started to step up its efforts to protect investors. Many of these warnings related to online fraud. The regulator said these warnings helped prevent £4m being lost to fraudsters.

In June the regulator said it has stepped up its efforts to tackle online financial fraud and committed to tackling scams faster as part of its new data strategy.

The regulator is currently scanning around 100,000 websites created every day to identify those that appear to be scams.

When it identified a fraudulent website, it requests the website host shut them down, but does not currently have the powers to force them to,

Between May 2021 and April 2022, the FCA added 1,966 potential scams to its consumer warning list. This is over a third more than it added during the same period the year before.

The regulator has committed to investing heavily in its use of data to tackle online scams in 2022/23. It is recruiting new staff across artificial intelligence, analytics, data science, cloud engineering and digital technology roles, adding to the 100 staff it has recruited in this area since 2020.

It is also stepping up its efforts to tackle inappropriate financial adverts. Last year 564 adverts were withdrawn or amended, double the number of the previous year.

The FCA is also in the process of developing a dashboard for all the financial companies it regulates, including workplace pension providers and advisers, and the sectors it oversees. The regulator said this will make it easier for its staff to identify and focus on the highest risk cases.

Jessica Rusu, Chief Data, Information and Intelligence Officer at the FCA, said: “Better use of data means we can be more proactive and find and stop harm faster. We are continuing to improve our data, technology and capabilities to act decisively in consumers interests, while making it easier for firms to report to us.”

One area of particular interest to fraudsters is pension transfers.

In July 2021 Action Fraud data showed that pension transfer scam victims were losing over £50,000 on average. This was more than double the figure it reported in 2020.

Most pension transfers are legitimate, but the Pension Scams Industry Group estimated that in 2021 around 5% of all transfer requests should give trustees and scheme managers cause for concern.

It estimates that around 40,000 pension savers lost £10bn to scams since 2015, many due to transferring to dubious schemes from a workplace pension.

In an earlier insight article we looked at the new regulations introduced under the Pension Schemes Act 2021 in November to tackle pension transfer fraud


– Understanding pension transfer fraud part 1/2

– Understanding pension transfer fraud part 2/2

The FCA’s new data strategy is part of the regulator’s new three-year strategy to reduce and prevent serious harm, set higher standards and promote competition.

The serious harms it is looking to tackle predominantly focus on tackling fraud and the poor treatment of consumers. As part of this three-year strategy the FCA said it is joining up its actions across sectors and working with partner agencies on a ‘whole system’ response.

The UK Government is currently developing its economic crime plan, and fraud action plan, with its partners, including the FCA. While counter-fraud work is already underway, in the short to medium-term fraud offences are likely to continue to rise.

A key part of this work is empowering consumers and firms to recognise potential scams.

The FCA’s ScamSmart consumer campaign has been widely welcomed by the workplace pensions industry. This consumer campaign helps workplace pension members spot the warnings signs of scams and access tools such as the FCA’s warning list of unauthorised firms. The campaign will continue to run over the next few years.