Partner Richard Cannon comments on Labour’s proposals to tackle financial crime in Law360

Partner Richard Cannon comments on Labour’s plan for financial services, and explores what these proposals could mean for the UK’s approach to combatting financial crime and safeguarding consumers.

Richard’s comments were published in Law360, 24 May 2024, and can be found here.

“The regulatory landscape in respect of Authorised Push Payment (APP) fraud has been fast moving. The current government’s direction of travel has been to increase the liability of payment service providers (PSPs) with new reimbursement rules due to come into effect in October 2024, which will obligate most PSP’s to make good victims of APP fraud up to a maximum of £415,000 – subject to certain exclusions. This end point comes after developing rules have required PSPs to develop their systems to protect consumers from APP fraud, including warnings and steps to intervene in suspicious transactions.

“The Online Fraud Charter of 2023 is a voluntary charter which has seen the major global online platforms and service providers including Amazon, Facebook, Google and Microsoft. The charter includes a commitment to a number of anti-fraud measures including blocking fraudulent material, routes to reporting fraud, takedown of fraudulent content and users, protection from fraudulent advertising, cooperation with law enforcement and intelligence sharing.

“Labour’s January 2024 policy paper on Financing Growth included an integrated approach to fighting fraud which includes tech companies. It is conceivable that this policy could develop such that tech companies are brought into the range of compulsory reimbursement measures as PSPs have. However, it is likely to be fraught with hurdles.

“The Online Safety Act 2023 toughened up the protection of the public from online harm, including fraudulent content. Whilst it does contain power for Ofcom to take financial enforcement action, it does not establish a general duty of reimbursement to the victims of fraud. Fresh legislation would therefore be required with a relatively long period of consultation, development of guidance and operational bedding in before victims of fraud are likely to see a penny from the vast wealth accumulated by the tech giants.”