More could be done to save scam victims from losing life-changing sums to bank transfer fraud when the Brexit transition period ends, says Which?
It said changes to legislation could be made so that regulators require all banks to follow a statutory code offering strong protections for scam victims.
Customers lost £200 million to bank transfer fraud in the first half of 2020 alone, the consumer group said.
Currently, people who are tricked into transferring money directly to a fraudster face a lottery as to whether they will get their money back, as many banks follow a voluntary reimbursement code, it said.
Under the code, customers should be reimbursed in situations where neither they, nor their bank is to blame.
Banks appear to have been interpreting the code in different ways, sometimes leaving those who have been tricked by sophisticated scams out of pocket.
Some banks have not signed up to the code, while TSB has its own reimbursement guarantee for its customers.
This means that that overall protections consumers can expect are patchy.
In the first six months of 2020, a total of £207.8 million was lost to authorised push payment (APP) fraud. Of the £126.5 million lost in cases assessed under the code, just £47.9 million was reimbursed to victims.
Which? that up until now, the Payment Systems Regulator (PSR) has claimed that a European Directive has prevented it from requiring bank transfer fraud victims to be reimbursed.
In its response to the Treasury’s review of the payments landscape, Which? said changes to legislation could allow regulators to require all banks to follow a statutory code offering strong protections for scam victims.
This new statutory code would replace the current voluntary code.
The Authorised Push Payment (APP) Code was created to help protect customers and tackle APP fraud.Our APP Project Manager Harry Evans writes about the APP Contingent Reimbursement Model Voluntary Code, one year on from its launch.See here for more: https://t.co/tKMz79SSJIpic.twitter.com/3CYqSRYGzK
— UK Finance (@UKFtweets) May 28, 2020
Which? said it believes that by making these changes, the Government can show that it will use the legal flexibility resulting from Brexit to benefit consumers.
Until changes are made, the PSR must use its existing powers to press ahead with a much-needed review of the effectiveness of the current voluntary code and explore options for strengthening it, Which? added.
Which? said the introduction of new standards through a statutory code would not stop firms from going even further for their customers. TSB’s fraud protection guarantee, for example, already promises to refund all losses, unless customers have been wilfully or recklessly negligent. It said that it has reimbursed 99% of victims.
Gareth Shaw, head of money at Which?, said: “The end of the Brexit transition period presents the Government with an opportunity to help thousands of people who might face the devastation of losing life-changing sums of money to scams.
“The Government should legislate for stronger standards to ensure banks are treating customers fairly and consistently, with greater protections to help them get their money back if they fall victim to fraudsters.”
A statement from the PSR said: “Industry already has the tools to improve customer protection but more needs to be done to improve the volume of reimbursement.”
It added: “If industry doesn’t use the tools it has to improve the levels of reimbursement, or outcomes don’t improve, the PSR will look at options for requiring APP scam reimbursement including making the reimbursement mandatory.
“In light of requirements under EU law (which continue to apply during the transition period), our view is that we cannot currently require reimbursement to be made to APP scam victims by banks.
“We are, however, keeping our position under review so that we can continue to develop policies which protect the interests of businesses and consumers when the transition period comes to an end.”