New rules laid out today state that UK banks must refund victims of fraud up to £85,000 within 5 days. While most high street banks, building societies, and payment companies voluntarily return funds taken by scammers, the Payment Systems Regulator (PSR) has determined that compensation will be mandatory from 7th October. Rejecting a previous cap of £415,000 it claimed the cap of £85,000 would cover over 99% of claims. It also stated that banks could claim back half the value of the stolen money from the financial institution fraudsters used to obtain it.
Although most institutions do already give refunds, there is no legal compulsion for them to do so and the wait times for the refunds can be as long as 18 months, leaving customers distressed and out of pocket. PSR Managing Director David Geale said the new rules would lead to a ‘consistent’ level of support across the financial industry for victims of fraud, regardless of where they bank. He also said that allowing banks to claim back half the compensation value, would force the industry to become more vigilant in dealing with this type of crime, encouraging them to monitor and shut down suspicious accounts quicker to prevent fraud in the first place.
However, Which? consumer group have challenged the decision to lower the cap, claiming it could have ‘disastrous consequences’. Rocio Concha, Which? director of policy and advocacy claims the lower cap would actually reduce bank and payment firms motivation to take fraud prevention seriously.
‘The regulator has shamefully sidelined scam victims, despite the evidence showing that this decision could have a negative financial and psychological impact on them.’
Authorised push payment fraud (APP), where fraudsters pose as legitimate companies selling goods that do not exist, has been on the rise. 232,429 cases were reported in 2023, a 12% annual rise and totalling over £459.7 million in stolen funds. The financial industry rejected the call for a higher cap due to the pressure it would put on smaller firms. The £85,000 cap is in line with the Financial Services Compensation (FSCS) which protects savings to that level. Of the 2023 cases, there were 411 reports of more than £85,000 being stolen and only 11 of a sum greater than £415,000.
(Sources: bbc.co.uk)
