VICTIMS of bank scams will be refunded under new industry plans that have been backed by the government.
The Treasury has said it will support new laws to make it mandatory for banks to reimburse customers who have been victims of push payment frauds, as long as they haven’t been negligent.
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Customers lost £355million to authorised push payment fraud (APP) in the first half of 2021.
This is where users are tricked into transferring money to a fraudster posing as a genuine payee such as a shop or their bank.
Industry watchdog the Payments Services Regulator (PSR) has been trying to toughen up the rules to clamp down on these frauds.
Currently, scam victims face a refund lottery, as it’s up to their bank to decide whether they’ll reimburse them for their losses.
A majority of banking giants, including Barclays, HSBC, Lloyds Banking Group and NatWest, signed up to a voluntary scam code in May 2019 launched by the PSR.
Under the code, victims will be reimbursed as long as they meet certain standards, but they are allowed to deny a refund if they believe the customer’s own negligence led to the fraud.
Now the PSR has proposed making it mandatory for victims of APP scams to be refunded if they have done nothing wrong.
It is also calling for the 12 largest banking groups in Great Britain and two largest banks in Northern Ireland to regularly publish data on their APP scam performance levels.
This will include how much they have repaid and where the fraudulent money has gone.
The Treasury has committed to legislating to support mandatory repayments from the banks.
John Glen, economic secretary to the Treasury said: “Push payment fraud is posing an escalating risk to UK customers, with increasingly sophisticated scams that can be detrimental to people’s lives.
“The government’s position is that liability and reimbursement requirements on firms need to be clear so that customers are suitably protected.
“The government will also legislate to address any barriers to regulatory action at the earliest opportunity.”
The PSR said the changes could be introduced by requiring Pay.UK – the largest payments system provider which manages direct debits and bank transfers – to make mandatory repayment part of its rules.
Alternatively, membership of a PSR-approved code could become part of Pay.UK’s rules.
Chris Hemsley, managing director of the PSR, said: “The range of steps we plan to take will show people which banks and building societies are likely to respond to frauds in the right way and will put the onus on financial institutions to get better at detecting and preventing scams.”
Its consultation on how to introduce the new measures closes on January 14 2022.
Consumer watchdog Which? welcomed the proposals after first raising issues about bank transfer scams in a super complaint five years ago.
Anabel Hoult, Which? chief executive, said: “People are still losing life-changing sums of money every day, so the Treasury must move swiftly towards introducing the necessary legislation.
“The regulator must also ensure it is ready to put in place mandatory reimbursement rules the moment that legislation is passed, so fraud victims are treated fairly and consistently when trying to get their money back.”
TSB launched its own fraud rules in April 2019 that sees customers refunded if they’ve been a victim of fraud – even if it’s a bank transfer scam.
In 2019, NatWest initially refused to refund two fraud victims who were cruelly scammed out of a whopping £28,000 between them.
Meanwhile, landscape gardener David Hunt lost nearly £10,000 when scammers pretended to be from HMRC.
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