Laura Suter, head of personal finance at AJ Bell, comments on the Government’s plan to force banks to reimburse fraud victims:
“The Government clearly doesn’t think the banking industry’s voluntary system for reimbursing fraud victims is doing enough, as it has announced plans to let the regulator force banks to compensate those scammed. It has branded the current scheme ‘inconsistent’ with ‘disparities’ between how banks hand out compensation and points out that it has left many victims suffering losses.
“The number of people conned into handing over their bank details or approving payments to scammers, also known as authorised push payment fraud, has soared in recent years, with the pandemic being a boom time for scammers preying on vulnerable people. The cost of living crisis pushing more people into precarious financial situations is sadly a situation that scammers feed on, meaning the scale of the problem is likely to get worse.
“The latest figures* show that despite the banking industry’s pledges to reimburse victims, for every £1 stolen only 43p was being returned to victims last year. When the scale of the problem saw £355.3m stolen in the first half of 2021 alone, that’s a massive loss from people’s savings and investments – representing life-changing sums for many victims.
“The new Financial Services Bill will pave the way for the Payment Systems Regulator to force banks to compensate victims, with a mandatory reimbursement for anyone who is tricked into transferring their money to a fraudster.
“However, that doesn’t mean every scam victim will definitely get their money back. The regulator will come up with its own criteria for who can be reimbursed and who will be left to stomach their losses themselves. What’s certain to happen is that banks will beef up their checks and processes when anyone makes an online transfer if they are going to be the ones footing the bill for more of the fraud.”