Banks cannot delay tackling transfer fraud a single day longer, Which? is warning, as new research shows a staggering £674 a minute is lost to this devastating crime.
The consumer champion is calling for all banks to urgently reassure their customers that they will be better protected against fraudsters by signing up to the new voluntary industry code, which comes into effect next week (28 May).
While the code represents a significant step forward in the fight against bank transfer scams, Which? believes further critical steps are required to halt this worsening crime.
Three years on from Which?’s super-complaint, losses to bank transfer fraud are spiralling out of control, with £354m lost in the last year alone – most of it stolen from personal accounts.
This figure means that every month, £29.5 million is lost to bank transfer fraud; that equates to £970,685 per day, £40,445 per hour, £674 per minute and £11 per second.
Bank transfer scams can cost people their entire savings, with average losses to personal accounts of £2,920 – and Which? regularly hears from victims whose lives have been thrown into chaos by the loss of much smaller sums.
The new code is designed to give better protection against transfer fraud and to ensure all those who have lost money through no fault of their own are swiftly reimbursed.
Ahead of its launch, Which? has written to UK Finance demanding that the industry meets five tests that will determine the Code’s success. These are critical in ensuring progress towards the overall goal of finally halting bank transfer scams.
Which?’s five key tests:
- Banks must promise to protect their customers by signing up to the Code with the regulator pledging to conduct a one-year review on its effectiveness.
- The regulator must ensure all banks introduce vital name-check security (confirmation of payee) no later than its new deadline of March 2020. The latest delay will cost people an additional £109m in losses while they wait for this important measure.
- No blameless scam victim should ever be denied reimbursement again, and full refunds should be issued swiftly.
- Banks must show they are serious about protecting consumers by immediately agreeing a long-term funding solution for no blame refunds.
- Banks must publish victim and reimbursement figures on a regular basis to allow effective monitoring in the fight against transfer fraud.
Last year, just 23 per cent of losses were returned, meaning countless victims were left out of pocket by these increasingly sophisticated scams – which often involved fraudsters posing convincingly as bank staff, lawyers and other legitimate businesses.
Which? is demanding an end to the dark days of victims struggling to get their money back, with the code now requiring signed-up banks to reimburse all blameless victims.
One bank recently went above and beyond the requirements set out in the code by offering a refund guarantee to all its customers who might fall victim. Which? wants to see other banks exploring whether this potentially game-changing approach should be adopted across the industry to ensure swift and fair reimbursement to all victims.
Which? believes the adoption of this code is a key first step towards putting an end to bank transfer fraud and will closely monitor the implementation of the code.
The consumer champion will not hesitate to demand intervention from the regulator if it fails to deliver for consumers.
Gareth Shaw, Head of Money, Which?, said:
“For too long, victims of bank transfer fraud have lost life-changing sums and subsequently faced a gruelling battle to get their money back.
“By adopting this code, banks must offer much greater protection to consumers, while quickly and fairly reimbursing those who are unfortunate enough to fall victim.
“Failure to do so will require swift intervention from the regulator- as these devastating scams can’t be allowed to derail lives any longer.”
Notes to editors
Please find attached a letter from Anabel Hoult, Chief Executive of Which? To UK Finance CEO, Stephen Jones.
Data on losses to bank transfer scams:
Losses per month, week, day and minute are calculated from the latest set of UK Finance figures.
A total of £354,300,000 was lost through APP scams, split between personal (£228m) and business (£126m) accounts. In total there were 84,624 APP scam cases, split between personal (78,215 cases) and non-personal (6,409 cases) accounts.
Financial providers were able to return a total of £83 million of the losses.
Average losses of £2,920 are calculated for personal accounts only.
Confirmation of Payee:
The PSR recently (May 2019) announced they are consulting further on Confirmation of Payee, and delaying its introduction until March 2020. This new date is nine months later than its original deadline of July 2019, and is likely to result in an additional £109m being lost to scams.
The following banks have committed to signing up to the Code
- Barclays
- Lloyds Banking Group
- HSBC
- Metro Bank
- Royal Bank of Scotland
- Natwest
- Santander
- Nationwide