No Blame Compensation Fund For Scam Victims

Last year 84,000 bank customers lost money some losing tens of thousands of pounds, when they were tricked into transferring their money to fraudsters by sharing their details.  Previously, most banks would only issue refunds where the customer was not at fault at all.

Some banks have now introduced a new, voluntary ‘no blame’ compensation scheme meaning more people may be reimbursed.

Refunds will come from a central pot where nether the customers or the bank where to blame.  The largest banks have a fund established already to reimburse no blame customers.

Already 8 bank groups have signed up and are committed to the new protection code.

• Barclays
• HSBC (Including First Direct and M&S Bank)
• Lloyds (including Halifax, Bank of Scotland, and Intelligent Finance)
• Metro Bank
• Nationwide
• RBS (Including NatWest and Ulster Bank)
• Santander (Including Cahoot and Cater Allen)
• Starling Bank

Fraudsters are now concentrating on individuals again rather trying to crack bank systems and so the incidence of such events are increasing. Their tactics go from impersonating people such as a homebuyer solicitor or builder that the person was due to pay or an online seller selling non-existing goods.  The individual authorises the payment and in most cases the banks have refused to refund the customers money.

The new code will have a set of criteria that a bank will use to determine if the customer should get their money bank and urge customers to contact them when the realise, they have been caught out by fraudsters.  Previously banks only refunded if a bank had handled the payment incorrectly, resulting in £354 million being lost to individuals and businesses last year alone with only £83 million refunded.

The new code will now test if reasonable care had been taken by the customer and assess the vulnerability of the individual and will hopefully see more refunds being paid.

Other banks felt the new code would encourage fraudsters to carry on trying their luck even more and have not signed up whilst others are launching their own compensation scheme.

Name Check Security

A separate ‘additional’ security layer scheme has been delayed until March 2020 to ensure checking the recipient’s name is as important as checking for a valid account number and sort code and will be designed to cut fraud further.

No more sending “Bob Smith the Builder” money online if the name on the recipient account number and sort code is not “Bob Smith the Builder” but is a fraudster account – currently no name check is made, just account number and sort code.