Victory for Mail as banks told: Refund fraudsters’ victims

BIG banks who fail to tackle fraud will be named and shamed under plans to ensure more victims get their money back.

In a victory for the Daily Mail, regulators will be able to force the largest firms to stick to strict refund rules.

Banks and building societies will also have to publish data on fraud prevention and reimbursement rates – and could be fined if they do not treat victims fairly.

Fraud has soared since the Covid crisis began, with criminals stealing the equivalent of £4million every day in the first half of this year. So-called authorised push payment (APP) fraud – when victims are tricked into transferring money to a fraudster – increased 71 per cent year-on-year as losses hit £355million.

A voluntary code of conduct was launched in 2019 to refund blameless targets of scams – but just nine banks signed up. Less than half of fraud victims got their money back under the scheme.

Bank customers faced a lottery when it came to refunds, as different companies interpreted the rules in different ways – allowing them to reject payouts.

One three-month period last year saw an unnamed bank issue refunds in just 1 per cent of cases.

The Financial Ombudsman, which settles disputes between banks and their customers, has ruled in favour of three-quarters of scam victims refused refunds.

Now, under new proposals from the Payment Systems Regulator (PSR), the system will go from a voluntary code to a mandatory one, underpinned by law.

In addition, data will be published regularly to reveal which banks are used by fraudsters to move stolen money. It is hoped the move will force banks to improve security to protect their reputations – and bottom lines.

Chris Hemsley of the PSR said the plans ‘will put the onus on financial institutions to get better at detecting and preventing scams’. The plan represents a victory for the Mail’s Stop the Bank Scammers campaign, which has long called for action to tackle the fraud epidemic.

Banks said other organisations – such as social media giants – should be forced to do their part, too.

Katy Worobec of industry group UK Finance said: ‘We agree that more needs to be done and have long called for a regulated code, backed by legislation, to ensure consumer protections apply consistently. As the PSR recognises, other industries have a key role to play in tackling fraud, which is why it’s so important that there is co-ordinated action from government and other sectors to tackle what is now a national security threat.’

Treasury minister John Glen said the Government ‘will legislate to address any barriers to regulatory action at the earliest opportunity’. A consultation on the proposals will run until January. Rules on fraud data will apply to Barclays, HSBC, Lloyds, Metro Bank, Monzo, NatWest, Nationwide, Santander, Starling Bank, the Co-Op, TSB and Virgin, as well as AIB and Northern Bank in Northern Ireland.

Richard Emery, from fraud consultancy 4Keys International, said: ‘Publishing scam data is crucial... [but] we need more firms to be transparent.’

He added: ‘My worry with mandatory refunds is that banks will find another way to wriggle out of paying.’