The UK government is preparing to implement a ban on cold calls for selling financial products, including cryptocurrency, as a measure to combat fraud and scams.
Fraud constitutes more than 40% of crime in the UK, costing the government billions annually. To address this issue, the UK is creating a National Fraud Squad with 400 new positions to tackle related crimes. The value of cryptocurrency fraud in the UK increased by 32% to £226 million ($283 million) in the year ending September 2022, U.K. Prime Minister Rishi Sunak said in the statement.
As part of its broader efforts to regulate the financial services sector and protect consumers, the UK Treasury has issued a consultation paper seeking public input on the potential impact of a cold call ban on businesses and private enterprises.
This move is in line with the UK Treasury Fraud Strategy introduced earlier in the year. The paper presents case studies, including instances involving cryptocurrency, highlighting the need for regulation due to the prevalence of suspicious calls.
“Cold calling for financial services and products has long been the tool of choice for fraudsters seeking to manipulate unsuspecting individuals into scams, especially targeting the most vulnerable. However, without a broad ban on cold calling, scammers can simply move from one financial product to another in an attempt to bypass the law or exploit loopholes. The government now intends to ban cold calling for all financial services and products,” the paper reads.
The UK government aims to reduce the risk to consumers and combat fraudulent activities through this proposed ban on cold calls, a measure that may impact various industries, including the crypto sector. As such, the regulators are mindful of how this might affect businesses and individuals. Striking the right balance between preventing crypto-related crimes and avoiding unintended consequences is a key challenge they’re navigating.
Since January 2020, the City watchdog has become the anti-money laundering and counter terrorist financing supervisor of UK’s crypto asset firms. At the time, the FCA kicked off a registration scheme for crypto-asset firms with an initial deadline of one year.
Earlier in June, the UK introduced new advertising rules for firms marketing crypto assets to consumers. Citing concern over investor protection, the FCA watchdog suggests that customers should take a brief period to educate themselves further about the risks involved.
Under the new rules, the financial watchdog introduced a 24-hour “cooling-off” period specifically for first-time investors. This pause allows investors to take a step back and reconsider their decision before proceeding with this type of risky investment. Additionally, the practice of offering ‘refer a friend’ bonuses will be prohibited.
The new regulations also require firms promoting crypto products or services to include a clear risk warning in their promotions and verify that individuals have the necessary knowledge and experience to invest in cryptocurrencies.
