Banks need to work harder to improve their responses to scams, a watchdog has said.
The Payment Systems Regulator was responding to a “super complaint” from the consumer group Which? that said banks were not taking enough responsibility when customers lost their cash after being tricked into money transfers.
The regulator said the way in which banks work together in responding to reports of scams needed to improve.
It also found evidence to suggest some banks could do more to identify potentially fraudulent incoming payments, and to prevent accounts falling under the influence of scammers.
Hannah Nixon, PSR’s managing director, said: “In a short space of time we have built a clearer picture of the problems we are facing, and it is evident that this type of scam is a growing problem that needs to be tackled.
“Tens of thousands of people have, combined, lost hundreds of millions of pounds to these scams, but the data we have seen so far is incomplete. We need a concerted and coordinated industry-wide approach to better protect consumers, and we need it to start today.”
Which? had raised concerns that, unlike many other payment methods, victims conned into sending money by bank transfer to a fraudster have no legal right to get their money back from their bank.
The group’s research also found that six in 10 people did not realise they had no consumer protection in such a case.
But the regulator said there was not enough evidence to justify making banks liable for reimbursing victims of such scams. It added that, as more evidence comes to light, it will consider whether it is appropriate to propose changes to the obligations banks have for these types of scams.
The watchdog has agreed a programme of work with Financial Fraud Action UK – a body that coordinates the fight against fraud – on which the banking industry should lead.
It said the industry needed to develop, collect and publish “robust scam statistics” to address a lack of data on the scale of the problem and enable the issue to be monitored.
The industry should also work to develop a common understanding of what information can be shared, and the barriers that exist to sharing information which could help scam victims recover their cash. The information commissioner’s office (ICO) will be involved in this.
The PSR also said a common approach to best practice standards needed to be developed, which both the victim’s bank and the bank that receives the money should follow when responding to reports of scams.
The regulator will monitor this work and review the progress in the second half of 2017.
It is the first super complaint received by the payments regulator, which was set up last year.
Which? made the complaint in September. It said UK consumers make more than 70m bank transfers a month, compared with just over 100m in a whole year a decade ago – but consumer protections had not kept up with changes in the way people paid.
Which? said if a consumer authorised a payment to a scammer using a credit card they were likely to be able to recover lost funds from their bank under section 75 of the Consumer Credit Act.
And if they had been tricked into providing their banking security details, and the scammer had used those details to make an unauthorised transfer of funds, the consumer may retrieve lost funds from their bank under the Payment Services Regulations 2009.
In one case seen by Which?, fraudsters claiming to be from a bank convinced a customer that their account had been compromised and to transfer 17,500 savings to another account, set up in their name.
Within minutes, the customer realised they had been tricked and contacted their bank, to be told the money had gone. The victim was offered a 10p refund – the amount the fraudsters had left behind.