The governor of the Bank of England has joined calls for the UK government to take a tougher stand against big technology companies putting consumers at risk by hosting scam financial promotions on their online services.
Andrew Bailey said consumers were more at risk from financial fraud and scams online than through offline media such as newspapers and television because of weaker regulation, and the government could tackle this threat by extending existing legislation.
“The online world is not subject to the same legal duties as the more traditional media,” Bailey, a former head of the Financial Conduct Authority, said in a letter to the House of Commons Treasury select committee, published on Friday.
“There is consequently no adequate shared responsibility with online service providers and consumers are at much greater risk.”
Bailey said in the letter the problem “could be tackled” through the online harms bill, currently progressing through parliament, which puts an onus on online companies to keep their users safe. However, this does not currently include harm from financial investment fraud.
But Bailey added there was “strong resistance” in other parts of the “official sector” to extending this legislation to financial services and this was “a serious problem”.
Bailey’s comments were in response to a letter from committee chair Mel Stride on what lessons could be learned from the London Capital & Finance scandal involving the sale of unregulated mini-bonds, in which thousands of savers lost £236m.
His intervention came as the Commons work and pensions select committee also called on the government to better protect people from investment fraud and scams estimated to have cost £10bn in losses for up to 40,000 pension savers since 2015.
In a hard-hitting report published on Sunday, the committee said regulators “appear powerless” to hold online companies to account for hosting scam advertisements in the same way they would be able to for traditional media.
The committee said tech companies, such as Google, were accepting payment to advertise scams and then further payments from regulators to publish warnings — a practice the committee described as “immoral”.
“There must now be parity across the media to ensure all adverts are regulated and the government should use its online safety bill to act,” the committee recommended.
The government said it was working with industry, regulators and law enforcement partners “to pursue fraudsters, close down the vulnerabilities they exploit and make sure people have the information they need to spot and report scams.” It would also consider additional legislative and non-legislative solutions but did not confirm it this included taking action through the online harms bill.
“The minister for pensions has been very clear that some tech companies are failing pension savers, that they must do more to crack down on scam adverts and should use their existing powers to stop online scammers using their site to promote fake adverts,” the government said in a statement.
Google said protecting consumers and credible business was a priority. “We take dishonest business practices and misleading ads very seriously and consider them to be a violation of our policies. When ads do not comply with our policies, we take action to remove them.”
Google said last year it had removed 3.1bn “bad ads” from its platforms, of which 123m were ads related to financial services.
Facebook said it did not allow fraudulent activity and had a dedicated group within its content moderation team policing fake profiles.
In 2019, it donated £3m to Citizens Advice to help fund a helpline for scam victims, following a legal campaign against the social network over the issue led by MoneySavingExpert founder Martin Lewis.
Twitter said it had a clear financial scams policy in place that explicitly banned the use of scam tactics to obtain money or private financial information. “Where we identify violations of our rules, we take robust enforcement action,” it said.