Setbacks to bank fraud victim fund

Bank transfer fraud has soared 40% in the past year – and now companies are dithering about how to refund blameless victims.

UK banks agreed in May to set up a voluntary code to ensure that people who have been unwittingly duped should be reimbursed, unless they ignored their bank’s warnings about the scam or were grossly negligent in transferring the money.

However, Pay.UK, the payment authority, has revealed there is no industry consensus on how a central fund to reimburse innocent victims should be paid for.

It had consulted on how the scheme would work but said despite there being overwhelming agreement that customers should be paid back in a “no-blame” scenario, there is no agreement among banks on how this should be done in the future.

If a customer loses money to a scam and the bank is to blame, the bank refunds the customer. If neither the bank nor victim are to blame, the victim is refunded from a no-blame fund. However, the funding deal for this expires on December 31 and it is unclear what will happen after that.

The Payment Systems Regulator says banks will still be able to refund victims if they choose to do so, and that it expects the industry to put arrangements in place to provide protection to their customers.

Stephen Jones, chief executive of UK Finance, which represents banks, said he was disappointed a new deal had not been struck.

He said: “There is strong agreement across the sector that we must all work together to create a sustainable funding system to compensate the victims of scams in no-blame situations. We are therefore disappointed a way forward has not yet been agreed.”