The consumer group Which? is calling on the government to force all banks to adopt new anti-fraud measures, after finding that more than £1bn has been lost to bank transfer scams in just three years.
Which? analysed bank fraud statistics since the start of 2017 and says the losses to consumers has been at least £1.1bn.
Thousands of consumers have individually lost life-changing sums after being duped into handing over their life savings, with the banks mostly refusing to refund their losses.
By the end of March, the banks are supposed to have introduced a new measure that will curb fraudsters. However, not all are planning to, Which? has warned.
The measure, known as confirmation of payee (CoP), will ensure the account name matches the one the customer enters when making a payment. Scammers frequently persuade victims that they have set up a new account in the victims’ name and ask them to transfer their money to it. The new measure will show up the true account holders’ name and should halt many scams in their tracks.
CoP will help stop fraudsters from posing as trusted organisations such as a bank or solicitor and tricking people into making payments to them, Which? said. Had the measure been introduced in 2017, it believed that £320m would not have been lost to fraudsters.
But the Payment Systems Regulator has only directed the six biggest banking groups to sign up by 31 March. Which? believes all banks must join the scheme in order for it to be effective.
RBS Group (including Royal Bank of Scotland, NatWest and Ulster Bank) and HSBC (including First Direct) were unable to confirm a specific date when asked if they would be ready by the regulator’s deadline. Metro Bank told Which? that it has no current plans to implement CoP at all.
Lloyds Banking Group is ahead of the pack, implementing CoP from 2 March for Bank of Scotland customers, before rolling it out to Halifax and Lloyds customers throughout the rest of the month.
Amid concerning reports of banks failing to follow the code’s rules around reimbursing blameless “authorised-push-payment” scam victims, Which? is concerned that a voluntary approach to ensuring victims are treated fairly is no longer viable.
Gareth Shaw, head of money at Which?, said: “The UK has been in the grip of a fraud crisis for years, but new security measures offered by the banking industry should finally give people better protection against increasingly sophisticated fraudsters.
“At the end of this month, we should get a true sense of how well the industry is tackling the issue. It is vital for all banks to commit to basic name-check security, and the whole industry should sign up and follow through on the protections offered by the scams code.
“If the banks fall short of making these commitments themselves, these initiatives must be made mandatory by the government.”
Chief executive of UK Finance Stephen Jones said: “A voluntary agreement alone is not enough and we share the view expressed by Which? that issues of liability and reimbursement would best be addressed by new legislation. Both the government and regulators must also urgently consider how customer data breaches and vulnerabilities in other sectors such as telecoms and social media are facilitating fraud, as part of a holistic strategy to protect consumers from harm.”
