It is to be made law that financial institutions such as banks and building societies will be required to refund victims of financial fraud.
The majority of financial fraud comes from Authorised Push Payment (APP) fraud. This is where you have unwittingly given card details either for security access of holding a deposit or you believe for a one off service payment but the authority gives permission for future automatic payments. The fraudster then has power to push payments through whenever they want and it is open ended.
Currently, financial fraud compensation for APP fraud is a voluntary code and different banks have their own ways of interpreting the code. Of the total of £754m pa fraud, £355m is APP fraud and is up 71% this year.
Newly proposed legislation will make it law that victims are protected and compensation paid. In addition, the Payments Systems Regulator also said that large banks and building societies will need to publish data on APP scams, including reimbursement levels for victims. 16 banking groups, including the following brands AIB Group (UK), Bank of Scotland, Barclays, Clydesdale Bank, Co-operative Bank, HSBC, Lloyds, Metro Bank, Monzo, NatWest/RBS, Nationwide Building Society, Northern Bank, Santander, Starling Bank, TSB, Ulster Bank and Virgin Money will need to report on APP fraud and compensation data.
At first glance, it may seen harsh that banking groups must compensate if you have given your bank details but then become a victim of APP fraud. Is it really the bank’s fault that you have been defrauded? Maybe not, but it the banking industries problem that APP even exists and frauds are so easily set up. This will force banking groups to take action to stamp out APP fraud.
In addition though, we believe that search engines and social media should be held to account. There appears to be absolutely zero financial screening or auditing of financial adverts and websites. The number of times we have searched e.g. for financial advice terms or services and we do not appear near the top but non regulated firms claiming to be financial advisers appear. Social media and search engines also need to be held to account.