A report from the Treasury Select Committee says that banks should consider retroactively reimbursing victims of push payment fraud.
MPs have told banks that unless they introduce certain fraud measures by March 2020 regulators should consider sanctioning them.
The Treasury Select Committee says that banks should also consider reimbursing victims of authorised push payment fraud (APP) to help tackle the “serious and growing problem” of economic crime in the UK.
In the first half of this year, £616 million was stolen from UK bank customers, according to UK Finance.
Of this, a total of £207.5 million was lost due to APP scams, where people are duped into authorising a payment into another account.
A new industry voluntary code offering consumers protection against APP fraud was introduced on 28 May.
Customers of banks that have signed up to the code will be reimbursed for their losses provided that they have taken reasonable care.
Banks that have signed up to the voluntary code include Barclays, HSBC, Lloyds Banking Group, Metro Bank, Nationwide, Royal Bank of Scotland, NatWest and Santander.
MPs are now calling for it to be made compulsory, with customers retroactively reimbursed back to 2016.
With money transfers going through so quickly, customers of banks have little time to be aware if fraud has taken place, the committee’s report says.
It recommends a 24-hour delay on all initial payments between accounts to give consumers time to consider if they are being defrauded.
From next March, banks will have to alert customers if they transfer money to a new account and the name does not match as part of the new Confirmation of Payee scheme.
“If the implementation date of March 2020 begins to look in doubt, regulators should consider introducing sanctions, such as fines, to firms who have not met the deadline,” the report says.
Currently, when you send an electronic payment you enter the name, the sort code and the account number. However, the account name is not checked.
Fraudsters are becoming increasingly sophisticated and are using this to trick people into sending money to the wrong account.
Under the new scheme, banks will be able to check the name on the account of the person or organisation you are paying when setting up a new payment or amending an existing one.
You will then be alerted if the name does not match the account.
Rushanara Ali MP, leader of the Treasury Committee’s inquiry, says: “With scams getting ever-more sophisticated, it’s clear that economic crime is a serious and growing problem in the UK.
“The Treasury Committee’s report examines the scale of economic crime faced by consumers, ways that financial firms are combating economic crime, how economic crime is investigated, and consumer’s rights and responsibilities.”
UK Finance chief executive Stephen Jones says: “Investing millions in security systems to defend customers, supporting law enforcement in disrupting criminals and helping customers protect themselves from scams are core priorities for the finance industry.
“We welcome the committee’s recommendations that issues of liability and reimbursement should best be addressed by new laws rather than just a voluntary code alone, and the recommendation that third parties should be liable for the associated costs to financial services when they are responsible for data breaches that increase the risk of payment scams.”
- This article was first written by our sister magazine Moneywise.