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Super-complaint response lets banks off the hook

Which? will continue to press for more action on scams

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The Payment Systems Regulator’s (PSR) response to the Which? super-complaint on bank transfer scams ‘has let the banks off the hook’.

The PSR has responded to the Which? super-complaint made in September.

Which? has been demanding change as, unlike many other payment methods, those conned into transferring money to a fraudster by bank transfer have no legal right to get their money back from their bank.

In many cases, bank transfer scam victims have lost life-changing sums of money.

In the first two weeks after launching our online scams reporting tool in November, more than 650 people told Which? about losing a total of over £5.5 million to bank transfer scams.

Sign the petition to support the Which? campaign to force government, regulators and business to do more to safeguard us from scams.

Failed to address the issue of liability

In response to our super-complaint, the PSR has told banks that they need to do more to protect their customers. It found that banks need to improve the way they respond to bank transfer scams and do more to identify fraudulent payments.

But the regulator concluded that it hadn’t found sufficient evidence to justify a change in liability, so banks will continue to not be liable for reimbursing victims of bank transfer fraud.

Alex Neill, managing director of Which? Home and Legal Services, said: ‘The regulator has finally acknowledged the considerable consumer harm caused by bank transfer scams.

‘However, while recognising that the industry is not doing enough, it has failed to adequately address the issue of liability and has let the banks off the hook, giving them little incentive to do more to protect their customers.

‘The outcome for people is, unfortunately, that they will continue to be scammed out of millions of pounds. We need to see swift action and not see this kicked into the long grass in the second half of 2017.’

The PSR has said that, further down the line, it will consider whether it is appropriate to propose changes to the obligations or incentives that banks have for these types of scams.

What will the PSR do?

In response to our super-complaint, the PSR has put together a package of work aimed at reducing fraudsters’ ability to perpetrate scams and boosting the chance of being able to recover the money lost when they do occur.

The PSR has agreed a programme of work with Financial Fraud Action UK that the banking industry should lead on:

  • Industry, liaising with the Information Commissioner’s Office as appropriate, to develop a common understanding of what information can be shared under existing law and the key legal barriers to sharing further relevant information (for example, information that would help victims recover their money).
  • Industry to develop, collect and publish robust scam statistics to address the lack of clear data on the scale and scope of the problem, and to enable monitoring of the issue over time.
  • Industry to develop a common approach or best-practice standards that both the victim’s bank and the bank that receives the money should follow when responding to reports of scams. We would expect this to cover issues such as the availability of fraud specialists and processes for reaching indemnity agreements between banks.

The PSR will monitor this work on an ongoing basis and commit to reviewing industry progress in the second half of 2017.

Hannah Nixon, managing director of the PSR, said: ‘In a short space of time, we have built a clearer picture of the problems we are facing, and it is evident that this type of scam is a growing problem that needs to be tackled.

‘Tens of thousands of people have, combined, lost hundreds of millions of pounds to these scams, but the data we have seen so far, is incomplete. We need a concerted and co-ordinated industry-wide approach to better protect consumers, and we need it to start today.’

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