You CAN get your cash back from a bank scam
Almost three-quarters of complaints to watchdog are now found in victims’ favour ... so why do banks still make it a tough battle?
BANKS are running out of excuses for denying fraud refunds as exclusive figures show complaints are now emphatically ruled in favour of scam victims. Money Mail can reveal that nearly threequarters of authorised fraud and scam complaints handled by the Financial Ombudsman are now won by customers — with banks forced to pay out more than £130 million in the past three years. Campaigners say banks should now stop fighting blameless victims and instead focus on improving security to prevent fraud in the first place.
Despite promising to abide by a new code of conduct introduced more than two years ago, the biggest High Street providers have failed consistently to treat customers fairly when they have been tricked into making payments to crooks. This has led to a soaring number of cases being taken to the Financial Ombudsman Service (FOS) — which handles disputes between financial firms and their customers.
In 2020/21 the free service received 7,770 new complaints from fraud victims tricked into transferring money to criminals — more than double the number dealt with the previous year. It resolved 5,600 of these cases and upheld 73 pc in favour of the customer.
However, the rise has led to a backlog at the Ombudsman, with long delays leaving many victims in limbo for months on end.
One in four cases took more than 12 months to reach a final decision, while a third took between six months and a year.
Campaigners are urging fobbedoff customers to persevere because there is now a high chance they will win their case. Martyn James, of complaints website Resolver, says: ‘The banks should not be tying up the Ombudsman’s time with these cases, nor leaving customers in limbo when they know full well they will be upheld.
‘The Ombudsman publishes its decisions on its website and it is vital that banks learn from them and evolve their processes. I am pleased it is taking a much stronger line on the banks, which are failing in their duty of care, and ordering them to reimburse victims of scams. While it can take months to resolve a case, customers should pursue the banks via this route.’
Banks can stop fraud when they try. New figures from industry trade body UK Finance shows that £32 million of fraud was stopped through the Banking Protocol scheme in the first half of this year — a 65pc increase compared with the same period last year.
WITH the protocol, branch staff are trained to detect the warning signs that someone is being scammed and make an emergency call to the police. Additional new fraud rules introduced in May 2019 were supposed to ensure scam victims were treated more fairly, with a better chance of reimbursement.
But the code of conduct is voluntary and in more than two years just nine banking groups — including Lloyds, HSBC, NatWest and Barclays — have signed up. TSB has its own fraud guarantee that promises to refund all innocent scam victims.
The standards state that those who fall victim to bank transfer scams should be refunded if they have taken care to protect themselves. But banks can wriggle out of reimbursing customers if they can prove they ignored ‘effective warnings’ before making a payment.
This might include a general fraud alert that pops up when customers make a bank transfer to a new payee. But experts have long warned that these warning messages are easy to miss or too general to be effective. Yet they are still one of the most common reasons used by banks to deny customers refunds, according to the FOS. Another frequent excuse is that the customer did not have a reasonable basis for believing the transaction was genuine.
But letters seen by Money Mail reveal that the FOS is no longer buying the banks’ excuses.
In July, antiques dealer Kevin Hanson was told by the FOS that he will be refunded by his bank, Lloyds, eight months after falling victim to a scam.
He was tricked into transferring £4,100 to a ‘safe account’ in November after being told by a fake bank employee his account had been compromised. Lloyds refused to reimburse him because he had ignored a scam warning that flashed up before making the payment.
And as the bank only managed to recover £1,050, Kevin, 64, was left more than £3,000 out of pocket.
HOWeveR, the FOS said it understood that Kevin, who lives in Derbyshire, would have felt under pressure and may not have taken in everything that was shown. It felt Kevin’s belief that he was speaking to Lloyds outweighed the details in the pop-up message and ordered Lloyds to refund the remaining balance plus 8 pc interest and any charges incurred as a result of the account being left overdrawn.
Kevin says: ‘I feel fabulous to have taken on Lloyds and won, and this should encourage scam victims to pursue their case to the end.’
A Lloyds spokesman says: ‘While Mr Hanson made the payment despite “Confirmation of Payee” flagging the account details provided did not match, and no attempt was made to verify the caller, we have acknowledged the ruling from the FOS and have refunded Mr Hanson.’
Linda and Ralph Brodie have also won their case with the Ombudsman and secured a £10,500 refund. Ralph, 74, had received a phone call in January from a bogus HSBC employee claiming he needed to transfer the money to three new payees to check his account’s security. He was reassured no money would be taken and visited
his branch in St Ives, Cornwall, as instructed. But 15 minutes after arriving home, he discovered £21,000 of his savings had vanished. HSBC said it would only refund half the money because Ralph did not make enough checks to ensure he knew who he was paying.
The FOS said this was unfair, and that it was satisfied an effective warning was not provided, which meant Ralph had a reasonable basis for believing he really was speaking to HSBC. The bank says it stands by its original decision but will refund the remaining £10,500 as instructed.
The banks’ code of conduct has been heavily criticised since it was launched in 2019. In December the Lending Standards Board (LSB), which governs the code, released a damning report describing bank scam alerts as vague, ineffective and not good enough. And in June this year it identified a number of ‘systemic failings’ in banks’ interpretation of the code. It accused firms of unfairly blaming customers, providing inconsistent information and exceeding the 15-day time limit for investigations.
Gareth Shaw, of consumer group Which?, says: ‘A worrying culture of victim-blaming from banks that are failing to properly apply a code they signed up to often leaves scam victims with no choice but to pursue reimbursement with the FOS, which while often successful can cause unnecessary distress.’
A Financial Ombudsman Service spokesman says: ‘Over the past three years we have seen a 60pc increase in fraud and scam complaints coming to us. Nonetheless, our work has resulted in over £130 million being repaid to victims of fraud. We know the scale of the problem and understand the terrible impact these scams have on people’s lives, which is why we continue to enhance our approach to resolve these complaints as quickly as possible.’