Don’t lose out to fraudsters in the great banking game change
As lenders hive off their ‘casino’ investment arms, customers are warned
REGULATORS, banks and industry experts are warning consumers that big changes under way could provide a new ruse for fraudsters.
A shift in how UK banks are structured, known as ring-fencing, must be completed by January 1, 2019 – but changes are happening now, well in advance of the deadline.
This includes assigning new sort codes or account numbers for up to a million customers.
These moves could inadvertently trigger a spate of scams, and banks themselves will need to be on high alert for cyber attacks as they handle large amounts of data during the overhaul.
THE CHANGES
BY LAW, banks with deposits of £25billion or more must separate their retail banking operations – providing current accounts, saving accounts and mortgages – from the investment side of the business, often described as ‘casino’ banking because of its greater risks.
The change is in response to the financial crisis of 2008. It is a way to prevent the need for future bailouts by the Government and taxpayers – and means customers are not put at risk by investment banking failures.
As a result, some customers are being given new bank details, mainly sort codes. These are the six-digit numbers that identify a customer’s home branch.
City regulator the Financial Conduct Authority says a ‘significant’ number of codes have already been migrated and all should be done by the middle of this year. Anyone affected will be contacted by their bank directly.
FRAUD ALERT
THE changes, while subtle and of little interest to most customers, could make some bank scams appear legitimate.
This could be the case in a fraud where criminals intercept email conversations between a consumer and a professional they are due to pay – such as a solicitor or builder. After reading the chain of emails, a criminal could pose as the professional, by asking the victim to pay money into his or her account – with a seemingly reasonable excuse as to why the account details have changed. In reality, the banks have set up a redirection service to ensure transfers using the old sort code will still make it to the right account.
The Financial Conduct Authority says such redirection services will remain in place for a ‘significant period of time’. Barclays has referred to a time span of three years for this.
Tashema Jackson is a money expert at comparison website uSwitch. She says: ‘During this period of ring-fencing it is incredibly important you remain vigilant to banking and online account scams. Fraudsters are likely to make the most of the banking upheaval.’
The Financial Conduct Authority says all bank customers should ‘be alert to the possibility of fraud’ while banks are warning customers via letters and online banking alerts.
Though the ring-fencing excuse is new, the underlying nature of the fraud is familiar. It usually includes a request to move money into a different account, or to reveal key account details such as a PIN. Often victims are urged to act quickly – making them fearful of losing money so they comply immediately without thinking.
Emails should be treated with utmost caution – as fraudsters posing as your bank will try to persuade you to click on a link where you can update details or find more information about ring-fencing, or any other topic. Such a link can trigger your computer to download software that allows criminals to see what login and password information you use for online banking.
Calls and texts may also be dodgy, even if they look to come from your bank. This is known as ‘number spoofing’, where fraudsters use technology to imitate legitimate business numbers on a victim’s caller ID or mobile display.
Jackson adds: ‘Be particularly wary of anyone who calls out of the blue and claims to be from your bank. If you are not sure, hang up, wait five minutes to make sure they are not still on the line or use a different phone, and call the number on the back of your bank card.’
WHAT ELSE YOU NEED TO KNOW
BANKS have different approaches to ring-fencing and the information being given varies.
For example, Barclays has informed its customers that from April ordinary counter services will not be available to UK customers in ‘crown dependency’ branches – in Jersey, Guernsey or the Isle of Man.
Given these branches are technically located outside the UK they will not be part of the new ringfenced bank.
Meanwhile, HSBC is warning that for some customers their international bank account number (IBAN) will also change, affecting those who receive payments from abroad.
If you use PayM, which allows money to be transferred to you using your mobile number rather than bank account digits, you may also need to re-register.
Jackson, of uSwitch, says: ‘Some consumers will have to update bank details for their pay, direct debits and apps they use.
‘But there is likely to be a safety net for years to come, with payments using the old sort code forwarded to their new account.’