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21 May 2021

NatWest to allow personalised bank transfer caps to beat scammers

Which? explains how it will work and what other banks are doing to combat fraud

NatWest Group customers can now set their own daily bank transfer limits, in a move aimed at reducing fraud, and other banks could follow suit, Which? Money reveals.

At present, your bank dictates the maximum amount of money you can send from your current account in a single day, and this cap varies widely.

Lloyds only allows daily online transfers of up to £25,000, for example, while Barclays lets you transfer up to £50,000, and Santander sets its cap at £100,000.

NatWest is hoping that giving customers more control will reduce authorised push payment (APP) scams - where victims are convinced to move money to an account controlled by a criminal.

The number of reported APP scams rose by 22% in 2020, with scammers stealing £479m (up 5% on the previous year).

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What is NatWest Group changing?

NatWest, Royal Bank of Scotland (RBS) and Ulster Bank (all brands under the NatWest Group) currently set a default bank transfer limit of £20,000 per day but this will be reduced to £5,000 per day.

Customers can log in to their online accounts to tweak this daily transfer limit, making it lower than £5,000 or higher (up to £20,000), as they please. This applies to digital payments only, not transfers requested by phone or in branch.

NatWest Group said that 95% of its customers have never paid someone else more than £5,000. But those who have made larger transfers previously can choose to keep the old £20,000 cap.

Changing your daily transfer limit will require the use of a card reader for security purposes.

NatWest has confirmed to Which? that this is available to online banking users now.

Will other banks let you set a daily transfer cap?

Which? asked the largest current account providers if they plan to follow NatWest's lead and allow customers to set their own caps.

Nationwide and Virgin Money told us this is something they're considering bringing in.

But there are no plans to introduce a daily transfer limit that customers set themselves at Barclays, HSBC, Lloyds Banking Group, Metro Bank, Santander, Starling, The Co-operative Bank or TSB.

Barclays said payment limits are reviewed on a regular basis but, for now, customers can only set their own daily ATM limit and spending limits on their cards. Certain types of payments, such as remote payments or specific categories like gambling, can also be turned off.

HSBC also said that payment limits are reviewed on a regular basis. TSB said it hasn't seen customer demand for flexible transfer limits but will keep its approach under review. Metro Bank said 'this is something we continue to explore.'

Monzo only allows customers to increase - not decrease - their default daily transfer limit of £10,000, on a case-by-case basis.

Starling told Which? that it's 'not convinced by the protection it would provide' but said it is exploring a new approach to managing payment limits, using data to identify unusual payments:

'We want to be able to assess individual payments that are out of character relative to the customer's payment habits. We are in the process of building and implementing a solution that will look at the payment in context of the customer's account, the reason for payment and their relationship/history with the destination of the funds, to determine if we need more information before the payment can be released.'

How do personalised payment caps combat fraud?

It remains to be seen if customer-controlled transfer limits become an important anti-fraud measure.

Fraudsters are master manipulators who will use every trick in the book to convince victims to either adjust the transfer limit or simply send them money incrementally.

However, this does let customers set their own 'normal' behaviour, and greater friction is generally positive - it gives banks another opportunity to warn users about fraud or intervene if they think something is wrong.

A NatWest spokesperson said: 'It also helps in a situation where a fraudster has taken control of a customer's account as without the card reader they would not be able to increase the daily transfer limit.'

What else are banks doing to protect you from scams?

This move from NatWest is the latest in a long line of measures introduced to combat APP scams.

Which? called for better protection from APP scams when we launched our Super Complaint in 2016.

Most banks have since signed up to a voluntary code - in place since May 2019 - committing them to reimburse victims of APP fraud, provided certain standards have been met. A list of signatories can be found here.

A,though TSB isn't signed up to this code, it does offer a unique 'fraud refund guarantee' which promises to refund all customers who fall victim to fraud.

This code marked a hugely important step in the right direction for victims. However, greater transparency is needed, as in many cases Which? has seen, banks are blaming customers rather than reimbursing them.

Which? is calling for all banks and building societies to publish their reimbursement rates on a regular basis.

We also want them to implement a layer of defence called Confirmation of Payee. This name-checking system tells you if the name of an account holder you intend to pay matches the one held by the receiving bank. It can help prevent mistaken payments (where you accidentally enter the wrong account numbers) as well as APP fraud.

Banks that haven't yet implemented Confirmation of Payee include: Metro Bank, Tesco Bank, The Co-operative Bank, Triodos Bank, TSB and Virgin Money.

The banking industry is also expanding the Banking Protocol to telephone and online banking. This rapid-response scheme allows branch staff to alert police if they suspect a customer is being scammed. This expansion is a crucial step to help vulnerable customers who have been unable to visit their local branch during lockdown.

However, branch staff need regular training to keep up with the latest tactics used by scammers and to ensure they ask the right questions to protect customers and alert the police.