Funding for scheme helping bank transfer scam victims extended to March

Interim funding arrangements for a scheme which reimburses people who are tricked into transferring money directly to a fraudster will be extended until the end of March, a trade association has said.

The voluntary industry scheme, launched in May, makes it easier for victims of authorised push payment (APP) fraud to get their money back in situations where neither they nor their bank is to blame.

There has been no industry consensus so far on how the scheme should be funded longer term, leading to concerns that people could be left without protection from January.

Trade association UK Finance said on Wednesday: “It is currently anticipated that the amount of interim funding for the ‘no-blame’ scenario, currently set to expire on December 31 2019, will last until at least March 31 2020, at which point progress will be reviewed.”

Before the scheme was set up, many people were losing large amounts because their bank was not obliged to pay them back as the customer had authorised the payment.

Such scams often involve criminals cold calling, emailing or texting people and pretending to be a legitimate organisation such as a bank, another type of business or HM Revenue and Customs (HMRC). They persuade their victim to transfer money directly into the criminal’s bank account.

Consumers collectively lost £208 million to APP scams in the first half of 2019, after being tricked into authorising payments to accounts controlled by criminals or purchasing goods from fake or unofficial sources.

Jenny Ross, Which? money editor, said: “This agreement is merely a stopgap that highlights the industry’s failure to secure vital long-term reimbursement for innocent victims of devastating transfer fraud.

“It’s clear that a voluntary, industry-led approach to protecting scam victims is not enough.

“The next government must work with the regulator to make the code and reimbursement mandatory – to finally ensure millions of people are no longer at risk of losing life-changing sums of money.”

Stephen Jones, chief executive of UK Finance, said: “There is strong agreement across the banking and payments sector that we, alongside third-party organisations who hold consumer data, must all work together to create a long-term, sustainable funding solution to compensate the victims of scams in ‘no-blame’ situations, where both the payment service provider and the customer met the standards expected of them under the voluntary industry code introduced in May.

“This voluntary agreement to continue the interim funding arrangements by seven of the code signatories into March next year therefore provides important time for further proposals to be considered and implemented.

“UK Finance shares the Treasury Committee and Which? view that issues of liability and reimbursement should best be addressed by new laws rather than just a voluntary code alone and will continue to call for new legislation to make the code mandatory to ensure that victims are protected and reimbursed.

“We urge any future government to work together with the Payment Systems Regulator to make this happen.”