Banks must do more to tackle scams where customers are tricked into transferring money to fraudsters, the regulator has said.
The Payment Systems Regulator (PSR) was responding to a “super complaint” from the consumer group Which? over concerns that victims tricked into sending money by bank transfer to a fraudster have no legal right to get their money back from their bank, unlike many other payment methods.
The regulator said the way in which banks work together in responding to reports of scams needs to improve but stopped short of proposing changes to make banks liable for reimbursing victims.
It said it will consider whether it is appropriate to propose changes to banks’ obligations as more evidence comes to light.
Alex Neill, managing director of Which? home and legal services, accused the payments regulator of letting “banks off the hook”.
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“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.”
The organisation has argued that consumer protections have failed to keep up with changes in the way people pay. UK consumers now make over 70 million bank transfers a month, compared with just over 100 million in a whole year a decade ago.
Which? said that in the first two weeks after it launched an online scams reporting tool in November, more than 650 people told it about losing over £5.5 million in total to bank transfer scams.
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PSR called on the industry to develop best practice standards and to 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 over time.
It urged banks to work together to help detect this type of fraud and has agreed a programme of work with Financial Fraud Action UK (FFA UK) — a body that co-ordinates the fight against fraud — on which the banking industry should lead.
Hannah Nixon, PSR 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.