Banks should not brush off their customers as being "grossly negligent" just because they have fallen victim to a scam, the financial ombudsman has said.
Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service (FOS), said that with frauds becoming increasingly sophisticated it is "not fair to automatically call a customer grossly negligent simply because they've fallen for a scam".
The FOS, which resolves disputes between consumers and financial firms, sees over 8,000 cases annually involving fraud and scams, including identity theft, fake banking websites and disputed cash withdrawals from ATMs.
The service said it regularly hears from banks that people who have been scammed have acted with gross negligence - and therefore banks are not liable for the money their customer has lost.
But the ombudsman service said there is a "very high bar" for being grossly negligent - and this is far more than just being careless.
It said this is because of the increasingly sophisticated scams which fraudsters are using that are becoming harder for people to spot.
The ombudsman service said banks should take into account the evolution and sophistication of frauds and scams - and not simply assume that their customers were grossly negligent.
The service said fraudsters are increasingly using technology to their advantage - even contacting people and pretending to be the ombudsman and making it look authentic as the ombudsman service's number appeared on the caller ID.
But it also said that in some cases people should do more to protect their own money. For example, if someone has kept their Pin and bank card together or given their security details to someone else it would make it harder for them to claim any money back.
Ms Wayman said: "Each year we see more than 8,000 cases involving fraud and scams - everything from disputed cash withdrawals and identity theft, through to mobile phone Sim-swaps and fake banking websites.
"And where criminals are involved, both banks and their customers often tell us in strong terms that they haven't done anything wrong.
"But it's not fair to automatically call a customer grossly negligent simply because they've fallen for a scam. That's especially true in light of the sophisticated way criminals exploit banks' security systems - and convince customers that their money is at risk.
"We often remind banks that they need to support what they're saying with facts. And if they can't do that, it's likely we'll tell them to cover the money their customer has lost."
Trade association UK Finance said banks already abide by existing laws.
Where payments are fraudulently made without customers' authorisation, banks are obliged to give a refund - unless the customer has deliberately or with gross negligence failed to comply with their obligations.
Where someone has been tricked into making a payment themselves, the rules are different - and banks are not obliged to refund payments which have been authorised by their customer.
UK Finance also pointed out that banks have a legal obligation to fulfil a customer's request to transfer money - even if they warned the customer they are at risk of potential scam.
It said banks will always make every effort to help a customer recover any stolen funds whether authorised or unauthorised, and will provide compensation to customers on a case-by-case basis. But because of different legal protections, reimbursement for authorised payments is not guaranteed.
Katy Worobec, managing director of economic crime at UK Finance, said: "Banks and building societies take the threat of fraud extremely serious and invest millions in advanced fraud prevention systems to protect customers, stopping £2 out of every £3 of attempted fraud last year. But we know there is more to be done.
"Banks will always make every effort to help a customer recover any stolen funds and the industry has introduced new standards on how banks respond to scam victims.
"At the same time our Take Five to Stop Fraud campaign is giving people the knowledge they need to stay safe and we are working with the Joint Fraud Taskforce to deter and disrupt the criminals responsible for these scams."