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Bank transfer scam victims could receive more consistent treatment

A code to reimburse victims of authorised push payment fraud was launched in May 2019, but there have been inconsistencies in how it is interpreted.

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Victims of bank transfer fraud could receive more consistent treatment from their bank, after a body which oversees an industry code set out ways to improve it (Tim Goode/PA)

Victims of bank transfer fraud could receive more consistent treatment from their bank, after a body which oversees an industry code set out ways to improve it (Tim Goode/PA)

Victims of bank transfer fraud could receive more consistent treatment from their bank, after a body which oversees an industry code set out ways to improve it (Tim Goode/PA)

Victims of bank transfer fraud could receive more consistent treatment from their bank, after a body which oversees an industry code set out ways to improve it.

Banks should also make sure there is a focus on preventing scams happening in the first place, as well as reimbursement levels, when measuring the success of the code, the Lending Standards Board (LSB), which oversees the code, said.

The voluntary code was launched in May 2019, and sets out standards for banks to follow regarding authorised push payment (APP) scams.

APP scams happen when people are tricked into transferring money directly to a fraudster.

Victims have lost life-changing sums in the past because they had authorised the transaction and could not claim the money back from their bank.

Under the code, banks can be reimbursed in situations where neither they nor their customer is to blame.

However there have been concerns that some banks have interpreted the code more narrowly than others, a customer’s vulnerability is not always taken into account, and banks’ scam warnings to customers have been inconsistent.

The LSB published a report into a review of the code on Thursday.

It said that, to tackle inconsistencies in how the code is applied across firms, it will introduce a governance and oversight provision.

This will ensure there is effective senior management oversight of the firm’s adherence to code requirements, helping to make sure the code is embedded within the culture of firms, from senior management through to customer facing staff, it said.

Its report said feedback has suggested “that when a customer reported a scam there was an inconsistent approach across frontline staff in terms of understanding and awareness of the code.

“Feedback also suggested that this was a repeated experience throughout the process which followed, from branch staff, contact with fraud teams through to final decision letters.”

While reimbursement levels are a key metric to the success of the code, we must not lose sight of the importance of prevention and detection measuresEmma Lovell, Lending Standards Board

The LSB said the way the success of the code is shown is another area needing improvement.

It said reimbursement levels are just one measure of the effectiveness of the code.

It will work with others to define a wider series of success measures which take account of fraud detection and prevention.

The LSB also noted that the rate at which some firms are signing up is slower than expected.

It will work with firms to understand the challenges that the requirements of the code can place on some business models.

Barclays, the Co-operative Bank, Britannia, Smile HSBC UK, First Direct, M&S Bank, Lloyds Bank, Halifax, Bank of Scotland, Intelligent Finance, Metro Bank, Nationwide Building Society, NatWest, RBS, Ulster Bank, Santander, Cahoot, Cater Allen Limited and Starling Bank have all signed up. TSB has its own code.

Emma Lovell, chief executive of the LSB, said: “The responses we received from this consultation evidence that the purpose of the code is supported by the industry, and we know that, when applied correctly, it is enhancing protections for customers, but there is more to do.

“The code’s objectives focus on prevention, detection and responding to scams. While reimbursement levels are a key metric to the success of the code, we must not lose sight of the importance of prevention and detection measures.

“Preventing customer loss and harm from scams is critical, which is why we intend to introduce new metrics across the code objectives.

“Part of this work will include bringing consistency across signatories for collation of data and their definitions.”

She added: “We will work with the industry to increase consumer awareness of the code and the ever evolving risk from scams, and with firms to implement any recommendations placed on them as a result of our thematic reviews to deliver consistency of application and greater protections for consumers.”

The LSB said it will publish a timeline for its work by the end of February 2021.

UK Finance continues to believe that legislation on APP fraud is needed to make the code mandatory across all providers and drive more consistent outcomes for consumers and firmsUK Finance spokesman

Neena Bhati, head of campaigns at Which?, said: “Some banks will still be able to get away with rejecting the vast majority of claims if transparency around reimbursement rates is not improved.

“The Government and payments regulator must work to make the code mandatory, with strong enforcement measures and regular publication of reimbursement rates by all banks and payment providers, to ensure that scam victims are not facing a lottery when they try to get their money back.”

A spokesman for trade association UK Finance said: “Fraud has a devastating emotional impact on victims and its proceeds fund serious organised criminal activities which damage our society. The banking industry’s primary focus is on stopping fraud happening in the first place.

“We will work closely with the Lending Standards Board on its recommendations to improve the voluntary code on authorised push payment fraud to ensure that it is as effective as possible in protecting customers and preventing fraud.

“UK Finance continues to believe that legislation on APP fraud is needed to make the code mandatory across all providers and drive more consistent outcomes for consumers and firms.

“This should be combined with a stronger regulatory framework to ensure technology firms and other businesses take action to stop criminals exploiting their platforms to commit fraud.”

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