The Treasury Select Committee has called for harsher regulatory action on financial firms which are yet to introduce Anti-Money Laundering (AML) and anti-fraud measures due to be implemented by March 2020.
In a unanimously-agreed report, MPs called on regulators to take action on firms that are not ready to roll out the Confirmation of Payee system by the March deadline, and for tougher rules for firms when compensating the victims of scams such as push-payment fraud.
The Confirmation of Payee process cross references payee names with account numbers and sort codes to ensure that payments are reaching the intended recipient.
The report also cited the need for further measures to stem rising levels fraud which saw £600 million stolen from consumers in the first half of this year.
The committee said that banks should introduce a 24-hour delay on all initial payments between accounts, providing time for consumers to consider if they are being defrauded.
It also called for the Contingent Reimbursement Model, which stipulates that consumers should be reimbursed for certain types of fraud, to be made compulsory for financial institutions. Firms also should consider retrospectively reimbursing customers back to 2016, the committee said.
More specifically, regulators should define the term ‘grossly negligent’ to provide consistency on whether or not a consumer is reimbursed.
The intervention comes after it was reported that the EU is to consider the establishment of a central authority with “direct powers” to tackle money laundering after a series of high-profile scandals underlined the bloc’s weakness in preventing dirty money flowing through its banks.
Rushanara Ali, the committee’s lead member on the inquiry, said: “With scams getting ever-more sophisticated, it’s clear that economic crime is a serious and growing problem in the UK.
“To ensure that consumers are protected, it should now be compulsory for financial firms to reimburse money lost to victims of Authorised Push Payment fraud, and they should consider doing so retrospectively.
She added: “The government and regulators should take on board all of the committee’s recommendations to enhance consumer protection in the face of this harmful tide of criminal activity.”
Recent Stories