Fury as banking boss says: Make customers foot the bill for fraud
A BANKING chief was criticised yesterday for saying customers should fork out for refunds to fraud victims.
Stephen Jones, who heads the trade body UK Finance, said a transaction tax on money transfers could be used to set up a compensation fund.
He said if banks had to foot the bill they would simply pass it on. ‘Customers will pay if the banks have to pay,’ he said. ‘There’s no such thing as a free lunch.’
His comments provoked fury among MPs and consumer groups who accused banks of failing to do enough to stop fraud happening in the first place.
‘This smacks of simple greed,’ said John Mann, a Labour member of the Commons Treasury committee. ‘The banks already make vast profits from customers, and now they want the public to foot the bill for compensating victims of crime too. It’s deeply unfair, particularly as bank branch closures are driving many people online where they are easy prey for criminals.’
Gareth Shaw of the consumer group Which? said: ‘ Consumers will rightly be angered by suggestions that they should foot the bill for bank transfer fraud.
‘While disagreement over who should fund the “no blame” scenario continues, innocent victims continue to risk being left bearing the cost, which is unacceptable.’
The Daily Mail launched a campaign last month calling for greater protection and compensation for fraud victims.
Around £145million was lost in the first six months of the year to so- called push payment bank transfer fraud, where victims are conned into transferring money into an account run by crooks.
The criminals often win people’s trust by posing as a police officer or bank employee.
Banks typically refuse to refund victims of this type of scam, arguing they authorised the payment.
Under rules proposed earlier this month, banks will have to refund customers if the lender fails to meet minimum standards of care. But in cases where the bank is not to blame, victims will continue to be left out of pocket.
Banks say in these cases the refunds could come from – among other options – frozen money in criminal accounts, regulatory fines for data breaches or charges on high-risk transactions. But Mr Jones has suggested a small charge could be added to all transactions made by customers.
He told the Mail: ‘It is vital that we get the right outcome for customers and ensure innocent victims are not penalised for the criminal actions of others. However, we also need to prevent the UK from inadvertently becoming a magnet for fraudsters.
‘A system under which banks automatically refund victims of authorised push payment fraud risks leading to higher costs for all consumers, or potentially limiting access to vital payments services, even in situations where banks have done everything that is expected of them.’
SNP MP Stewart Hosie, another Treasury committee member, said: ‘It would be more than a little cheeky of the banks to be charging their customers up front to cover the cost of online fraud, when it happens because they’re shutting branches and forcing people to go online.’
Labour MP Wes Streeting, who is also on the committee, said: ‘Banks have been the biggest beneficiaries of state benefits for the last decade through bailouts and quantitative easing.
‘It’s becoming pretty tiring hearing UK Finance suggesting that consumers should pay more in taxes, when they’ve already paid more in tax rises and service cuts because of a financial crisis that wasn’t of their making.’
Baroness Altmann, former pensions minister and champion for older workers, said: ‘If banks had to make a contribution toward the cost of refunding victims there would be a financial incentive to do more to tighten up their systems.
‘Banks are all about the money but fraud is about more than that. It is incredibly stressful and damages people’s confidence.’
A spokesman for the Payment Systems Regulator, which is drawing up the code on fraud, said it wanted to see incentives to stop the scams happening and, when they do occur, refunds for victims if they have done nothing wrong.