Just one in 700 scams result in a fraud conviction despite rising numbers of investment fraud, Quilter has found.
A Freedom of information request submitted by Quilter to the Ministry of Justice showed fraud convictions have fallen by 10 per cent on average year-on-year since 2011 to reach levels not seen since the Fraud Act 2006 was introduced.
In 2019, 3.7m incidents of fraud occurred in England and Wales, but only one in five of these cases (743,380) were reported to the National Fraud Intelligence Bureau.
Of these, just 5,234 convictions were secured under the Fraud Act 2006, amounting to one in 142 cases reported to the authorities.
This compares to around one in every 32 police recorded thefts ending in a conviction in the same year.
The FOI also showed that despite fraud carrying a maximum sentence of 10 years imprisonment and a fine, in 2020 the average custodial sentence secured under the Act was just under 20 months and the average fine was £463.
Debbie Barton, financial crime prevention expert at Quilter, said: “Over the past few years, we’ve seen a worrying rise in the number of investment frauds reported to Action Fraud.
“From dubious cryptocurrency and forex trading schemes to non-existent investment bonds, fraud lurks everywhere, particularly online and on social media.
“Yet instead of seeing an uptick in the number of fraud convictions to match the rapid increase in reports to Action Fraud, we’ve seen the opposite. Fraud convictions have dropped off a cliff since 2011 to reach levels not seen since the Act was first introduced.”
Barton said investigating fraud was “extremely complex, costly and time consuming”.
She added: “A good start to protect the public would be for the government to include further fraud typologies in the Online Safety bill so that technology companies have a legal duty to tackle harm caused on their sites, and have to take up the slack in monitoring the online world for scams.”
Last week (July 21), the Treasury and Work and Pensions committees wrote to the prime minister urging him to reconsider including paid-for online advertisements in the government’s Online Safety bill.
The committees demanded answers from Johnson on why the government’s policy has so far “been to legislate against user-generated fraud but not fraud committed through paid-for advertisements”.
In May, the government announced measures to tackle some online scams in its Online Safety bill but stopped short of including fraud via advertising, emails or cloned websites.
After initial criticisms of the bill’s coverage, Johnson said at the Liaison Committee on July 7 he was “more than happy to look at it” if bodies felt it was “in some way inadequate”.
However, some of the big tech companies have made moves to voluntarily crack down on scams.
From August onwards, Google will require financial services advertisers on its platforms to show they are authorised by the FCA or qualify for one of its limited exemptions.
Earlier this month, social media platform TikTok went as far as to ban the promotion of various financial services products including investments and cryptocurrency.
amy.austin@ft.com
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