Banks refunding victims of scams ‘like asking fox to guard henhouse’
PUTTING banks in charge of refunding all scam victims would be “like asking a fox to guard the henhouse”, MPS have warned.
The Treasury committee, a powerful group of cross-party MPS, warned that plans to protect scam victims had been “unacceptably delayed” until 2024, despite hundreds of millions being lost to criminal gangs every year. It now wants to see all victims automatically reimbursed by the end of the year.
The committee first called for customers to receive automatic refunds in cases where banks approved payments to fraudsters, known as “authorised push payment fraud”, in 2019.
Last September, the bank transfer watchdog, the Payments Systems Regulator (PSR), tabled plans for banks to reimburse losses over £100 within two days of the fraud being reported – but the requirement will now not be fully implemented until 2024.
MPS also said proposals to hand responsibility for implementing mandatory reimbursement to a separate body – PAYUK – which is guaranteed by the financial services industry – are a conflict of interest.
PAYUK will be responsible for ensuring the very banks and building societies that are its own guarantors pay out large sums to reimburse consumers, the committee added.
Tory MP Harriett Baldwin, the committee chairman, said victims had waited “far too long for a fair and functional scam reimbursement scheme”.
She said: “While these new proposals are a step in the right direction, the way the regulator plans to implement them is fundamentally flawed. Putting an industry body in charge of reimbursing scam victims is like asking a fox to guard the henhouse. The regulator needs to take back control of the reimbursement process, rather than leave it in the hands of an industry body which is inherently conflicted.”
MPS have given the regulator a deadline of the end of 2023 to ensure mandatory reimbursement is fully implemented in the banking industry.
A PSR spokesman said: “All feedback received will be considered carefully before we make any final decision on the best course of action to make sure people are properly protected from these devastating scams. We will publish our final position in May.”