Victims of financial crime suffer psychological shocks
The impact of financial crime goes far beyond the monetary shock for those affected, according to a new study which calls for an overhaul of regulations and better support for victims.
The report, released Thursday by Transparency Task Force, a social enterprise group that campaigns for greater transparency in financial services, also warns that the sector’s regulatory framework is failing.
“We found that victims’ experiences negatively impacted all areas of their lives, with devastating financial, social, emotional and support impacts,” the report said.
“The severity and extent of these impacts are particularly highlighted by the themes of stigma, depression, anxiety, suicide and social withdrawal; but even these alone do not paint the full picture.
The report is based on 25 in-depth interviews with people affected by a range of financial problems. These include banks mis-selling products such as payment protection insurance, scams involving fraudulent investment products, and cases of mortgage prisoners, customers who are tricked into paying higher rates than the rest of the market.
The impact on their well-being ranged from low self-esteem and distrust of authority to social withdrawal and even suicidal thoughts. Victims often found informal support through online communities or campaigns.
More than 32.4 million complaints have been filed about PPI, an insurance product that banks sold to personal loan and credit card customers in the 1990s and early 2000s, many lenders le selling to borrowers who were ineligible to claim or unaware they were making additional payments to buy one.
Lenders have accumulated £50bn to fund the compensation. On average, 87% of complaints involving PUPs were upheld, with a redress payment of £2,000.
“Financial fraud is a scourge on our economy, our society and our country. But financial fraud and malpractice also have a huge human cost. As this article shows, it destroys the lives of innocent people,” said David Pitt-Watson, a fellow at the University of Cambridge’s Judge Business School.
“This is an extremely serious issue in plain sight, an ugly elephant in the room. We can and must do so much better.
The UK is currently facing a “fraud epidemic”, according to banking industry trade body UK Finance. This includes an increase in scams in which victims are tricked into sending money to fraudsters posing as authority figures, such as bank clerks and police officers.
Investment scams caused the greatest losses although they only account for a small proportion of fraud. The victims lost £171.7million as a result of bogus investments in things like gold, real estate and cryptocurrencies.
Social media websites have become a key vector for the spread of these scams. Under the UK’s Online Safety Bill, introduced in Parliament in March, major online platforms would have a “duty of care” to protect users.
However, on Thursday it was announced that the bill had been shelved until at least early September when MPs return from their summer recess.
“The Online Safety Bill has the potential to stop millions of pounds worth of scams each year by forcing the biggest tech companies to take responsibility for the flood of ads on their sites paid by fraudsters to scam people. innocent,” said Rocio Concha, policy director. and advocacy with a consumer group Which?
“The government must commit to passing this important legislation. Any rollback would be an unforgivable betrayal of scam victims.