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FCA probe into fraud claim refunds

The financial watchdog is to investigate banks, building societies and credit card lenders to see if they are breaking the rules on refunding money to customers who are victims of fraud, it has confirmed.

The Financial Conduct Authority (FCA) will launch a review in the summer, saying early analysis showed that 11% of annual fraud claims are unfairly rejected, potentially affecting 500,000 people over the next three years.

Rules currently in place say customers are entitled to a refund from unless it can be proved they were at fault through gross negligence, for example by not properly protecting their Pin number.

But the FCA said it is concerned about some claims being dismissed, especially those involving Chip and Pin machines or retailers the victim has shopped with before.

Clive Adamson, the FCA's director of supervision, said: "It can be extremely distressing to discover that your account has been accessed by a fraudster.

"Consumers want to be treated properly by their bank when trying to sort out any issues that have arisen.

"The rules are clear on this issue, so I want to find out if they are being applied properly right across the board."

The probe will be contained in the FCA's business plan when it is launched on Monday. It will look at whether firms put an "unfair burden of proof" on consumers or makes the claiming process so complex it puts people off.

It also warns that online, telephone and mail order fraud is rising.

The FCA came into being a year ago to make sure firms are putting consumers at the heart of their business models and stop them pushing unsuitable products.

Among its ammunition, the fledgling regulator can impose unlimited fines and compel businesses to give consumers their money back when they have lost out due to poor treatment.

The UK Cards Association, the trade body for the card payment industry, said card users already had "strong legal rights" protecting them from fraud.

A spokesman said: "Those customers who are a victim of fraud are entitled to full refunds.

"Last year industry evidence showed that 97% of claimants get a full refund on fraud losses and this figure was backed up by Which? in February 2013.

"There are instances where cardholders are not eligible for a refund when investigations reveal that they have been grossly negligent or complicit with the fraudster.

"As the FCA establishes itself we would expect it to undertake a series of reviews across a variety of areas which we will assist them in to make sure cardholders are getting the appropriate level of protection."


From Belfast Telegraph