Financial fraud is now the most common crime in the country; According to NatWest, one in seven of us fell victim to fraud last year.
The growing convenience of online banking and the increasingly sophisticated tactics of scammers mean that victims can easily lose life-changing amounts of money, sometimes with just a few clicks of a mouse or tap of a phone screen.
Currently, if you unknowingly transferred money to a bank account controlled by a fraudster, most major banks have signed a voluntary industry code that requires them to return your money if you are not at fault.
But until now, it has been a mystery how good each company is at this, as banks have fought tooth and nail to avoid publishing the information. As a result, victims have no idea whether their bank is compliant.
Last week the Payment Systems Regulator (PSR), the payments regulator, released a series of data showing how well the big banks are performing. The results were amazing.
While the TSB, which has its own fraud indemnity guarantee separate from the voluntary industry code, leads the way in recovering more than 90 percent of overall app fraud losses, only four parties have signed up to the code: Barclays, HSBC, First Direct and Landelijk. Indicators above 70 percent are achieved, which hardly inspires confidence among the clients of these companies.
Refund rates were impressive regardless of whether companies signed the voluntary code or not. Starling, one of the signatories, recovered only 37 percent of the fraud amount. Monzo and Allied Irish Bank, which did not sign the agreement, returned 22 percent and just 10 percent respectively.
On the plus side, from next year the voluntary refund code will give way to a mandatory system that will require banks (along with more than 1,000 other payment service providers) to give victims their money back unless they can prove they traded with respect. . “Gross negligence” – i.e. very significant degree of negligence.
However, there are concerns that despite the positive steps taken to introduce a fairer and more consistent loan repayment system, PSR risks undoing this good work by succumbing to pressure from banks.
PSR offers a maximum amount for fraud of £100 or £250. By the regulator’s own estimates, setting a deductible of £100 would mean that almost a third of bank transfer fraud cases would not be eligible for a refund, and at £250 that amount would be around half. What incentive will banks have to prevent fraud involving relatively small amounts? Doesn’t this open the door for fraudsters to focus their attention on scams with a monetary value below the excess?
Banks note that nearly 80 percent of all fraud starts online, meaning tech giants must also bear the burden of compensating victims. Thanks to the Which? Tech giants will be forced to do more by taking legal responsibility to ensure fraudulent content does not appear on their sites.
Communications regulator Ofcom has the power to fine tech companies 10 percent of their annual turnover, giving them a real incentive to up their game.
Now that PSR redemption figures are becoming clear, banks should have financial incentives to protect people from fraud. The regulator must vigorously resist industry lobbying and introduce a fair and consistent reimbursement system.
Source: I News
I am Moises Cosgrove and I work for a news website as an author. I specialize in the market section, writing stories about the latest developments in the world of finance and economics. My articles are read by people from all walks of life, from investors to analysts, to everyday citizens looking for insight into how news will affect their finances.