View more on these topics

Paul Lewis: Banks’ calls to delay fraud duties are sneaky and unfair

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.

Paul Lewis: FCA can stop banks’ exploitation tactics

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.

Insolvency Service issues warning over increasing pension scams

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.

Paul Lewis: The NI sting depriving 1950s women of their state pensions

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

Recommended

Handshake-Business-Finance-Deal-Corporate-700.jpg

Wealth manager acquires Oxford IFA

Listed wealth manager Kingswood has swooped for Oxfordshire IFA Thomas & Co Financial Services in a deal worth up to £3.3m. In a stock market update this morning, Kingswood says it has agreed to buy Thomas & Co for an initial cash payment of £1.5m, with the remaining £1.8m dependent on meeting “revenue and profitability […]

FCA building FCA fees

FCA rebukes 48 investment firms for Mifid II disclosure failures

Forty-eight investment companies are under investigation for failing to disclose costs in line with the Mifid II regulation, according to The Times. The Markets in Financial Instruments Directive II came in to force 3 January 2018 and it brought an obligation to disclose all fund fees upfront. The FCA has disclosed the number firms it is investigating […]

1

A third of UK firms consider Brexit relocation

Almost a third of UK firms have at least considered a move overseas in light of Brexit, according to a new survey by the Institute of Directors. The employers group says 18 per cent were either planning or actively considering moving activities overseas with 11 per cent – chiefly larger companies – having already done […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com