Which? is calling for the government to legislate to protect people from losing money to bank transfer fraud, a crime that has cost consumers £200 million in the first half of 2020 alone.

In its response to the Treasury’s review of the payments landscape, the consumer organisation outlined how changes to legislation could allow regulators to require all banks to follow a statutory code offering strong protections for scam victims.

Up until now, the Payment Systems Regulator (PSR) has claimed that a European Directive has prevented it from requiring bank transfer fraud victims to be reimbursed.

This would replace the current voluntary code, which is being applied inconsistently by banks responding to consumer requests for reimbursement.

Which? argued the move could allow the PSR to push through changes to the payments system that facilitates bank transfers, introducing stronger protections for victims of Authorised Push Payment (APP) fraud – similar to a guarantee that already covers direct debits.

By making these changes, it stated that the government can use the legal flexibility resulting from Brexit to cut the amount victims lose to bank transfer fraud.

In the first six months of this year, a total of £207.8 million was lost to authorised push payment fraud. Of the £126.5 million lost in cases assessed under the code, just £47.9 million was reimbursed to victims.

The existing Contingent Reimbursement Model Code is based on the fundamental principle of fully reimbursing those who have lost money to criminals through no fault of their own. It was introduced following a Which? super-complaint that highlighted the gap in this type of fraud compared to other forms of payment such as debit and credit cards.

However, since its introduction in May 2019, when eight banks signed up, the pace at which other banks have joined the code has been too slow, argued Which? - with the likes of Clydesdale and Yorkshire Bank Group, Monzo and Tesco Bank still yet to sign up.

Despite the amounts returned to customers having doubled since its introduction, average reimbursement rates have only been around 40 per cent.

Reimbursement rates by individual banks, which have been published by the PSR anonymously, fluctuate dramatically, with one firm fully reimbursing just one per cent of victims, whereas another had fully reimbursed 59 per cent.

TSB’s Fraud Protection Guarantee, for example, already promises to refund all losses, unless customers have been wilfully or recklessly negligent. It says it has reimbursed 99 per cent of victims.

Gareth Shaw, head of money at Which?, said: “The end of the Brexit transition period presents the government with an opportunity to help thousands of people who might face the devastation of losing life-changing sums of money to scams.

“The government should legislate for stronger standards to ensure banks are treating customers fairly and consistently, with greater protections to help them get their money back if they fall victim to fraudsters.”

Share Story: