Banks must do more to help those hit by scams, says watchdog

Those conned into transferring money have few rights. Picture: Getty Images/iStockphoto

The Payment Systems Regulator (PSR) has set out an action plan following a “super complaint” made by Which? over concerns that, unlike many other payment methods, victims conned into transferring money by bank transfer to a fraudster have no legal right to get their money back from their bank.

But Which? said that by not making banks liable when someone loses their cash to such a scam, banks had been let off the hook.

The PSR said more can be done to prevent scams happening in the first place and to respond faster to help people get their money back.

It said information about the scale of the problem is “poor” and the industry should compile robust statistics. Banks should also look at what information could be shared to help victims recover their cash.

A common approach to best practice standards should also be developed, which both the victim’s bank and the bank that receives the money should follow when responding to reports of scams, the PSR said.

But the regulator stopped short of proposing changes to make banks liable for reimbursing victims of such scams, saying at this stage there is not enough evidence to justify a change in liability.

As more evidence comes to light, it said it will consider whether it is appropriate to propose changes to banks’ obligations. The PSR will review the progress made by the industry in the second half of 2017.

Alex Neill, managing director of Which? home and legal services, said: “The regulator has finally acknowledged the considerable consumer harm caused by bank transfer scams.

“However, while recognising that the industry is not doing enough, it has failed to adequately address the issue of liability and has let the banks off the hook, giving them little incentive to do more to protect their customers.

“The outcome for people is unfortunately that they will continue to be scammed out of millions of pounds. We need to see swift action and not see this kicked into the long grass in the second half of 2017.”

Which? has argued that consumer protections have failed to keep up with changes in how people pay. UK consumers now make more than 70 million bank transfers a month. Which? said that in the first two weeks after launching an online scams reporting tool more than 650 people told it about losing more than £5.5 million in total.