Banks appear to be trying to dodge a vital scheme that would drastically reduce fraud victim figures
The banks want to delay the introduction of a major change in the way they process payments that could stem the tsunami of fraud sweeping the country. A report by the banks’ trade body UK Finance warns some firms will not be ready to make the change until the first quarter of 2020, more than six months after the 1 July deadline set by the Payment Systems Regulator.
The new system – called Confirmation of Payee – would check if faster payments made by customers were going to the right destination.
If the payee name entered by the customer did not match the one on the bank account they were sending the money to, they would be warned. That would prevent many of the current crimes known as authorised push payment fraud.
The latest figures show £145.4m was filched from the bank accounts of 34,128 customers in 2018. Those numbers, on the face of it, represent 76 per cent more victims and 44 per cent more money than in the same period in 2017, though UK Finance insists the rise is smaller. Fraud consultant Richard Emery of 4Keys International told me on Money Box that £1bn has been stolen via these crimes in five years.
Accounts from the victims of these crimes show the latest wave is even more sophisticated than previous ones. The new fraud starts with an email apparently from TV Licensing, which warns people their payment has gone astray and they should pay again by clicking a link.
Many do that without realising it is just the bait, as revealed in one detailed account from a reader I will call Marilyn.
She was, she admits, “completely taken in” and paid. That gave the thieves her banking details and within hours they called her pretending to be from the fraud department of her bank.
Her phone showed the caller number was the one used by her bank. Such “number spoofing” is easily done with a device that can be bought online.
The “fraud department” then asked Marilyn if she had made a large payment to Argos recently. She had not. Ah. Had she paid anything via email recently? She told them about the TV Licensing payment. Aha, the thief replied, your bank details have been stolen and compromised, and your money is at risk, both in your current account and your savings accounts. I see you have savings accounts; could you just confirm the details?
Thoroughly frightened, Marilyn did and soon disclosed the amount in them – just under £100,000. Switching from fear to reassurance, the thief said not to worry; the bank had set up a safe account for her to transfer this money to and gave her the details.
Over the next few days she was regularly in touch with the thief and transferred all her money in chunks to the new “safe” account. It was, of course, all lies.
This crime would have been stopped by Confirmation of Payee. So why do the banks want to delay it?
Because they typically refuse to refund money lost to these criminals.
Once Confirmation of Payee is in place, if they do not join the scheme or do not use it efficiently, PSR managing director Hannah Nixon has made it clear to me the banks will have to reimburse the victims.
UK Finance wants it to be delayed. It told the regulator: “The timelines currently envisaged are simply not achievable… capacity and capability in firms to implement a new regulatory mandate in the first half of 2019 is, in consequence [of other regulatory changes], extremely limited… The result would be only a few firms implementing Confirmation of Payee, creating confusion among customers and a long tail of firms going live.”
It fails to mention that those who do not make the deadline would be liable to pay victims the money stolen.
The Building Societies Association goes further and suggests stripping the PSR of the responsibility for Confirmation of Payee, leaving the change entirely to the industry.
The same industry that has sat by while tens of thousands of customers have been robbed of hundreds of millions of pounds.
Nixon has been the force driving through these changes and ultimately will make banks pay if, in future, they fail their customers.
The regulator’s website says: “Confirmation of Payee will see consumers better-protected from APP scams and have a greater chance of being reimbursed if they do fall victim.”
No wonder some want to take it out of her jurisdiction.
That must not be allowed to happen. It is essential Nixon keeps the responsibility for finishing this policy and, where appropriate, making the banks pay.
I have said before that Confirmation of Payee will not wipe out these crimes.
But it will make it much more difficult for thieves to be successful. Where they are, it will be more likely that the banks pay, not their customers.
*The Payment Systems Regulator announced on 31 January that Hannah Nixon would be leaving in April to move on to the next stage in her career.
Paul Lewis is a freelance journalist and presenter of BBC Radio 4’s Money Box programme. You can follow him on Twitter @paullewismoney