UK: banks should do more to compensate

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Banks 'can do more' to compensate fraud victims

Banks 'can do more' to compensate fraud victims

By Kevin Peachey Personal finance reporter
30 April 2020

Some fraud victims are missing out on compensation because banks may be treating cases as a tick-box exercise, a review has found.

Victims can lose large sums after being tricked into transferring money to fraudsters they believe are genuine traders or even solicitors.

Some banks have signed an agreement to ensure victims are refunded when they or their bank are not to blame.

A review has found the system is working well, but with some problems.

One area of particular concern is that some victims are not being identified as particularly vulnerable - perhaps because of their age or circumstances - when they call their bank or building society about a fraud.

The Lending Standards Board (LSB), the governing body for the code, said a review of a sample of cases revealed that the failure to spot vulnerable victims, despite evidence being available, could affect compensation claims.

'Swift action'

Millions of pounds has been lost to so-called Authorised Push Payment (APP) fraud.

Initially, banks were refusing to refund some victims, as they said the payment had been made on the agreement of the victim.

Later some, but not all, banks signed up to a code to ensure blameless victims were refunded. There remains disagreement over how this should be funded in the long-term.

The review of the code highlighted some concerns, such as a lack of consistency over scam warnings and record keeping, but concluded there was general support from the membership to make it work for victims.

"Where improvements need to be made, we have issued recommendations to individual banks and these are currently being worked through by firms," said LSB chief executive Emma Lovell.

Chris Hemsley, managing director of the Payment Systems Regulator, said: "This report highlights the work that the code's signatories still need to do. An important part of this code is to make sure victims of APP scams are reimbursed if they have done nothing wrong.

"The data we have seen so far suggests the industry isn't achieving the right outcomes at the moment, which is why I called on them to take swift action to do more."
 
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