Peers have said the public must be given more protection against cyber-crime and victims should be able to report such crimes directly to the police.

In its follow on report on Personal Internet Security, the House of Lords Science and Technology Committee also called for legislation to ensure banks cover customer losses incurred through e-crimes and for the introduction of a data breach notification law.

This is not the first time the committee has called for a reversal of the reporting rules and a shake-up of internet security. However, the Government ignored the recommendations when they were first published last year.

The committee, which roundly condemned the Government for this, said it had “at last started to take the risks seriously”. But it expressed regret that "a level of indifference on the part of the Government has now been dispelled only as a result of recent incidents involving serious losses of personal data".

However, the Lords now want the Government to go much further. Specifically they want a reversal of the reporting rules for the public brought in on 1 April 2007. This would mean that members of the public could report e-crime directly to the police rather than through their bank.

The committee pointed out that under the current arrangements, banks may have a commercial incentive not to pass a report to the police. Certainly if 200 people report they are victims of the same scam online, if reported to the police by the bank it is only reported as one crime

Victims of e-crime are also told that they are not actually victims; this status would be given to the bank or the retailer. However, the committee wants to make it easier for consumers to get banks to cover their losses and was not satisfied with the Government's position that the Banking Code offers enough protection for customers.

The committee had received evidence that where a PIN or password is used in an online fraud banks often refuse to refund customers, claiming they must have been negligent or complicit in the fraud. The committee was also told the Financial Services Ombudsman and the courts do not offer an adequate method of redress for customers whose banks refuse to cover their losses.

The third major recommendation was a call for organisations to be able to inform the public about losses of personal data.