FCA amps up crackdown on coronavirus-related fraud
The Financial Conduct Authority (FCA) has ramped up efforts to crack down on coronavirus-related fraud during the pandemic through the rollout of two new sandbox services.
Sandboxes allow companies to innovate new products without being subject to usual regulation, allowing them to test financial services before developing them globally.
The FCA’s two new sandboxes, launched over the weekend, will focus on supporting products and services which help firms tackle coronavirus-related challenges.
Its new digital sandbox will see the regulator collaborate with Canada Corporation to aid innovative firms in developing software to tackle Covid fraud.
In a first for the financial services watchdog, the FCA’s new digital sandbox will use synthetic data to simulate real markets, allowing companies to test their products at speed and scale before being rolled out to the public.
The watchdog said it will seek applicants who can “detect and prevent fraud and scams, support the financial resilience of vulnerable consumers and improve access to finance for small and medium sized enterprises”.
Covid cons
It comes after fraud rocketed during lockdown, as scammers took advantage of Covid-related government loan websites to groom customers into handing over their details.
Impersonation frauds almost doubled during the pandemic, with scammers scooping up around £208m from fake government loan forms, phishing emails and bogus websites, according to the latest data from UK Finance.
More than 15,000 impersonation scams were reported in the first half of 2020, marking an 84 per cent increase compared to the same period last year.
Meanwhile, investment scams rocketed nine per cent during lockdown, with criminals raking in £55.2m by duping investors into handing over money on cloned websites impersonating FCA-regulated firms.
FCA director of innovation Nick Cook said: ‘The FCA is a strong believer in the positive power of innovation. Today we are strengthening the range and scale of support we are providing to innovative firms to deal with the challenges raised by the pandemic.
“As a regulator we recognise the need to continually experiment and learn in order to stimulate innovation.”
He added: “We are excited to launch this new service and by the lessons it will provide for future iterations of the initiative.”