Bank transfer scams code is not working as intended, says UK Finance
A voluntary code which compensates blameless bank transfer scam victims is not working as intended more than a year after it was launched, according to trade association UK Finance.
It made the comments as it announced that temporary funding arrangements for the code have been extended for a further six months to June 30 next year, while a long-term solution is developed.
Katy Worobec, managing director of economic crime at UK Finance, said there is a lack of consistency in customer outcomes and a lack of clarity for banks around how they should implement the code.
The voluntary code, which was developed by the banking industry and consumer groups, was launched on May 28 2019.
It compensates people who are tricked into transferring money directly to a fraudster, in situations where neither the victim, nor their bank, is to blame.
Previously, victims of authorised push payment (APP) scams had lost large amounts of cash forever, because they had authorised the transfer and so were not entitled to claim the money back from their bank.
More than £89.2 million has been reimbursed to thousands of customers since the code was introduced.
But concerns have previously been raised by consumer campaigners that banks are not applying the code in a uniform manner and may sometimes be interpreting the code too narrowly by expecting customers to have sophisticated financial knowledge or relying on customers seeing generic scam warnings as a reason to turn down claims.
And as the code is voluntary, not all banks have signed up to it. TSB has its own compensation code.
Ms Worobec said: “It is right that those who fall victim to these scams through no fault of their own should be compensated.
“However, over a year since its launch, the voluntary code is not working as intended, with a lack of consistency in customer outcomes and a lack of clarity for signatories in how they should implement it.”
The industry is calling for further action to be taken with new legislation to drive consistent outcomes for consumers and firms.
Ms Worobec continued: “While a long-term, system-wide solution to tackling this threat is developed, the seven code signatories that have provided interim funding for compensation since launch have therefore extended this temporary arrangement for a further six months.
“This will give the Government time to introduce new legislation and to engage with regulators on a long-term, sustainable funding model and we will continue to work closely with them to do so.”