Vic­tory for fraud vic­tims as banks forced to act

The Daily Telegraph - Your Money - - FRONT PAGE -

A forth­com­ing code to help vic­tims of bank trans­fer fraud could al­ready be pay­ing div­i­dends, dis­cov­ers Sam Mead­ows

sug­gest that, although HSBC felt it had car­ried out all the nec­es­sary checks – and sat­is­fied cur­rent re­quire­ments – it had cho­sen to is­sue a re­fund ahead of the in­tro­duc­tion of a re­im­burse­ment code that is likely to broaden the re­spon­si­bil­i­ties of banks sub­stan­tially.

By the end of September, the Pay­ment Sys­tems Reg­u­la­tor is due to pub­lish a set of rules on when vic­tims of bank trans­fer fraud should be re­im­bursed.

Cur­rently fraud­sters’ banks are obliged to pay the vic­tim back only when it can be proved that they failed to take rea­son­able care in check­ing doc­u­ments, even if those doc­u­ments are false. It ap­pears that the code will force them to take more re­spon­si­bil­ity and make it far harder to wash their hands of vic­tims’ losses.

Although the new re­im­burse­ment code will not be for­mally adopted un­til Jan­uary, the om­buds­man will be able to take it into ac­count im­me­di­ately when mak­ing de­ci­sions, mean­ing that most in­sti­tu­tions are ex­pected to fol­low it.

Bank trans­fer scams are among Bri­tain’s fastest-grow­ing crimes. Fig­ures from UK Fi­nance, a trade body, re­leased ear­lier this year showed that £236m was lost to this type of fraud in 2017 – with only £60.8m re­funded to vic­tims.

Crim­i­nals trick vic­tims into trans­fer­ring money, of­ten pos­ing as a so­lic­i­tor or fi­nan­cial ad­viser and steal­ing cash in­tended for a house de­posit or re­tire­ment fund. The con­se­quences can be life-chang­ing.

This news­pa­per has cam­paigned for banks and build­ing so­ci­eties to take greater re­spon­si­bil­ity for their role in these scams. But those who seek re­funds cur­rently face mad­den­ing in­con­sis­ten­cies, with some banks agree­ing to re­fund a vic­tim in cir­cum­stances in which oth­ers do not.

Tele­graph Money un­der­stands that the PSR’s code will lay out de­tailed cri­te­ria for vic­tims’ banks that will re­quire them to give “spe­cific warn­ings” on sus­pi­cious pay­ments, iden­tify out-of-char­ac­ter ac­tiv­ity and pro­tect cus­tomers they know to be vul­ner­a­ble.

A spokesman for the PSR said: “The code will set out what is ex­pected of both in­dus­try and con­sumers to re­duce the oc­cur­rence of scams and the cir­cum­stances for when con­sumers should be re­im­bursed. This will give ev­ery­one greater pro­tec­tion against this type of fraud – and vic­tims a much bet­ter chance of be­ing re­im­bursed.”

In de­sign­ing its re­im­burse­ment code, the PSR set up a steer­ing group of banks, build­ing so­ci­eties, con­sumer rights bodies and char­i­ties, with dis­cus­sions now en­ter­ing their fi­nal stages.

In a meet­ing last month the group re­it­er­ated its com­mit­ment to the prin­ci­ple that a vic­tim who had taken rea­son­able care should be re­im­bursed – whether their bank was at fault or not. How­ever, the min­utes note that there is no agree­ment yet on where the fund­ing will come from

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