BANKS HANGING US OUT TO DRY

EXPOSED: Their plan to dodge refunds for scams

SHAMELESS banks have mounted a secret lobbying campaign to avoid having to refund victims of fraud.

Watchdogs will spell out tomorrow the steps banks must take to tackle scams costing families £1million a day.

It was hoped the measures would include a proper compensation fund.

However a letter leaked to MoneyMail reveals that banks have told regulators and government officials they should not

STOP THE BANK SCAMMERS

be made responsible. Figures published yesterday show that around £145million was lost to ‘authorised push payment’ fraud in the first six months of the year. Only £31million was refunded.

Many of the victims were persuaded by fraudsters to transfer cash to another account for safety – only to see it vanish.

‘The banks are shameless,’ said Suzanne Raftery, a former Scotland Yard detective

and fraud expert at Requite Solutions. ‘They often don’t care about the devastation these scams cause for people. They care about money.’

Gareth Shaw, of Which? Money, said: ‘It’s two years since we highlighted a real lack of protection for people targeted through no fault of their own – but people are still losing life-changing sums of money every day and action from the banks has been woefully insufficient.

‘The finance industry and regulator must quickly introduce measures to stop these scams from happening in the first place and commit to reimbursing all victims who are not at fault – otherwise they risk further eroding trust in the banking system.’

If fraud continued at the current rate, banks would be on the hook for an extra £200million of losses this year.

The biggest five, Lloyds, RBS, Barclays, HSBC and Standard Chartered, made profits of £9.3billion between them in the second quarter of the year.

The Mail is campaigning for clearer rules to protect victims, help them to trace their stolen money as well as get access to compensation.

The leaked letter was sent last month by Stephen Jones, chief executive of trade body UK Finance, to a number of officials including Andrew Bailey, who heads the Financial Conduct Authority.

Mr Jones said: ‘I speak for all payment service providers (banks) involved to date when I state that they do not believe they should be required to compensate a consumer for the (presently) unquantifiable ‘residual risk’ to which your letter refers.

‘This is not because they do not wish a consumer who has acted reasonably to be reimbursed in such circumstances.

‘They do. It is because PSPs do not accept they should or could be automatically liable for this risk.’

He claimed it was not right that banks should be ‘financially responsible’ for scams that start with data breaches in other sectors such as telecoms and retail.

He warned that a code of conduct that did not put more onus on the customer might lead to more fraud. It is not known whether the rules will demand better compensation for victims.

The code is the result of eight months of work by banks, charities and consumer rights organisations, which were part of a steering group appointed by the Payment Systems Regulator.

The rules are likely to include giving customers timely warnings if they notice suspicious activity on their account and taking measures to prevent criminals opening accounts in the first place.

The idea is that if banks then fail to meet these minimum standards of care they must refund victims.

The proposed code, which should come into force at the start of next year, will be voluntary but it is expected that most major banks will sign up. It will also include a requirement for customers to take reasonable steps to protect themselves against fraudsters.

If they behave recklessly or negligently banks would not be expected to refund them.

However, experts say that most scams these days are so sophisticated that even the smartest of people are at risk of being conned.

But while banks admit that it is right that these victims should be refunded, they refuse to accept this is their responsibility.

Nicky Morgan, the Tory chairman of the Commons Treasury committee, said: ‘As online banking and payments become more prevalent, millions of customers are exposed to the risk of economic crime. As part of the Treasury committee’s inquiry into economic crime, we’ll look at how consumers are affected, and the response of the regulators and financial institutions, including banks.

‘Whilst we all have a responsibility to protect ourselves against fraud, financial institutions also have a role to play in stamping out such criminal behaviour.’

John Mann, Labour MP for Bassetlaw, said: ‘For too long banks have been able to place the blame on intelligent and careful individuals when they are conned by sophisticated fraudsters manipulating the banks’ processes.

‘It is high time the financial services industry faced up to the fact that these people are not wilfully making payments – they are being tricked and the results are devastating.

‘Banks need to face up to the problem and reimburse their customers when they fall victim to scams instead of washing their hands of them. I am in full support of the Daily Mail’s campaign.’

When the code is published the steering group is expected to continue to work together over the next couple of months in a bid to find a solution for a compensation scheme for ‘authorised fraud’ victims.

Spokesmen for UK Finance and the Payment Systems Regulator refused to comment.

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