Open banking customers ‘risk being scammed’
Experts have warned that customers taking advantage of Open Banking face a heightened risk of scams. Consumer groups say the new banking rules, which will come into force on Saturday, will help customers save money, but could also leave them open to scams and “rip-off ” deals.
CONSUMERS taking advantage of an online banking revolution face a heightened risk of bank transfer scams, experts have warned.
From Saturday, new rules will force financial institutions to share detailed customer data with each other, in order to let people compare deals and see all their money on one screen.
According to consumer groups, while so-called “Open Banking” is likely to help millions of consumers save money, others could become victim of scams and “rip-off ” deals.
Which? said it expected the change to result in a higher instance of “push payment” scams, where fraudsters hack into someone’s account, or trick them into transferring life-changing amounts of money to a criminal’s bank account.
This is because many small technology firms, which may be more susceptible to being hacked, will seek to obtain consumers’ financial details for the first time.
Get Safe Online, an internet security group, also sounded the alarm over a rise in the number of unscrupulous firms pretending to be involved in Open Banking in order to steal details.
Gareth Shaw, of Which? Money, said: “Open Banking has the potential to give people greater control of their money and boost choice, but it also raises critical questions around data privacy and security.” Bank account holders will be asked if they want their financial data to be shared with other banks and companies regulated by the Financial Conduct Authority.
This includes their salary and detailed spending and saving patterns, which, once shared can be used by companies to create personalised deals for people, fundamentally changing the way they select products.
Non-financial companies, such as those selling cars, holidays and energy tariffs, can also apply to appear on the Open Banking register – a list of firms that can ask people for their financial details.
Consumer experts warn Open Banking may work against consumers who overspend and do not have time to shop around for the best deals.
James Daley, the director of Fairer Finance, the campaign group, said: “The biggest risk is that companies may use people’s data cynically to benefit themselves at the expense of their customers. Using their personal data, companies are going to able to determine which consumers are sensitive to price and which aren’t. This gives them an opportunity to exploit people who are bad at managing their money.”
A spokesman for Open Banking said: “Any company offering services that use Open Banking will have to be regulated by the Financial Conduct Authority and enrolled on the Open Banking database. The system has extremely heavy security built in.”