Banks will next week enter a milestone agreement that will see every blameless fraud victim refunded all of their stolen money.
It spells a landmark victory for Money Mail following years of campaigning for those tricked out of life-changing sums.
But, today, as figures from consumer lobby group Which? reveal fraudsters are stealing £674 a minute — almost £1million a day — we call on our biggest banks to ensure they keep working to better protect customers.
Threat: Figures from consumer lobby group Which? reveal fraudsters are stealing £674 a minute — almost £1m a day
The voluntary code — which HSBC, RBS, NatWest, Lloyds, Nationwide and Santander have all signed up to — promises reimbursement for victims provided they have shown a reasonable amount of care.
Average losses are around £2,920 per victim, while fraud complaints to the Financial Ombudsman Service (FOS) are at an all-time high — up by 40 per cent to more than 12,000 in 2018/19.
The new code, compiled by a steering group of campaigners and banks, will oblige members to refund customers tricked into transferring money to fraudsters.
For years they have been able to shrug off responsibility when customers were deceived by crooks posing as legitimate organisations, such as their bank.
Experts say the code is the first key step to tackling the fraud epidemic, but there are a number of issues still to be addressed and it is not retrospective.
But while the code will end the pain of fraud for millions, there are still delays to a key security check that could prevent the crime in the first place.
A long-awaited safeguard — Confirmation of Payee — will ensure that when customers transfer money, the payee’s bank account number and name have to match.
But this has been delayed by nine months leaving millions of people vulnerable to scams.
In the absence of the check, fraudsters posing as legitimate companies and individuals are able to trick people into transferring money into their accounts.
I waited five months to get my £8,000 back
Natwest refused to refund university lecturer Rebecca Scott for five months after fraudsters stole almost £8,000 from her bank account.
She had received a phone call from a man claiming to be from NatWest’s fraud team. He asked her to log in to online banking and took her through her most recent transactions, which were legitimate.
He said he was concerned about her account security.
The next day she got another call from the same man. He said her account had been compromised and they had to move her savings of £7,744.38.
The fraudster sent a code to Rebecca’s phone which she entered into her card reader. When she called NatWest later to ensure her account would not be blocked while she was travelling, she found her balance was just £200.
She realised she had been a victim of fraud, reported it to the bank and was told her account was now secure. Yet, hours later, the criminals accessed her account again and stole her £2,000 overdraft.
It was only after five months of letters of complaint and advice from Which? that the bank refunded her fully. Rebecca, 34, says: ‘Losing all that money was devastating, and the bank left me high and dry for five months.’
A NatWest spokesman said: ‘We take fraud and scams very seriously and review every case on its own merit.’
Regulators wanted the new check by July, but it has emerged that banks now do not have to fully implement the new system until March next year.
Experts at Which? estimate that fraud victims could lose as much as £109 million because of the delay.
Gareth Shaw, head of money content at Which?, says: ‘Confirmation of Payee would cut fraud losses in half overnight.’
Banks which have signed up to the code have all offered an initial contribution to a fund which will see ‘no blame’ customers reimbursed until the end of this year.
But a long-term funding model has yet to be agreed. One proposal is a fee paid by banks on transactions, which could see the cost passed on to customers. Only Lloyds and Nationwide have promised to absorb the costs.
Under the new code banks must make a decision to reimburse within 15 working days or 35 in exceptional circumstances. The payment must then be made ‘without delay’. Mr Shaw says: ‘By adopting this code, banks must offer much greater protection to consumers, while quickly, and fairly, reimbursing those who are unfortunate enough to fall victim.
Failure to do so will require swift intervention from the regulator — as these devastating scams can’t be allowed to derail lives any longer.’
Under the code, banks can refuse to refund scam victims when they have ignored warnings or when they have been ‘grossly negligent’.
Fraud expert Richard Emery, from consultancy 4Keys International, says ‘gross negligence’ could involve an individual making a conscious, voluntary decision with a clear understanding of the risk.
But he says customers refused payouts on these grounds should take their case to the FOS where they will have a good chance of having their complaint upheld.
He adds: ‘Any bank that relies on the gross negligence argument will have an uphill battle trying to prove this.’
Only individuals, charities and businesses with fewer than ten staff, and a turnover under £2 million, are covered by the code.
Last month, TSB introduced its own Fraud Refund Guarantee, which covers all types of scams.
As of April 14, customers who fall victim to scams are reimbursed up to £1 million. It will cover the costs of the scheme itself, but won’t pay out if customers are repeatedly conned because they did not follow the bank’s advice.
Stephen Jones, boss of trade body UK Finance, says firms who sign up to the code will commit to reimbursing victims of scams in any scenario where the customer has met the minimum standards.
He says a long-term funding agreement for the ‘no-blame’ scenario will be decided by January 2020.
He adds: ‘Banks follow all the requirements set by the government and regulators and will also reflect the decisions and guidance of the Financial Ombudsman Service in deciding how the threshold of gross negligence should be interpreted in individual cases.’
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.