Scam victims must be refunded within five days under new bank laws


Banks will be forced to reimburse victims of fraud within five days, under new laws.

New rules will require banks to give victims their money back within one working week, apart from in cases of gross negligence or where supposed victims are found to have played a role in the fraud.

Currently scam refunds are paid in line with a voluntary code of guidelines, but not all banks are signed up and fewer than half of victims get their money back.

The cost of the mandatory reimbursement will be split 50:50 between the firms sending and receiving the payment, so that all banks and building societies will be incentivised to take preventative action on “APP” scams, the Payment Systems Regulator, which has been consulting on the new measures, said.

“APP fraud”, or Authorised Push Payment fraud – where someone is tricked into sending money to a fraudster – is widespread in the UK, costing victims nearly £500m last year, according to the latest figures from UK Finance, the banking tradebody.

There will be no minimum value threshold for APP fraud claims. In a previous consultation, £100 was proposed as the minimum threshold – but this has now been scrapped after MPs questioned why scam victims who lost less than £100 should not be refunded.

There will however be a cap on how much victims can claim. This maximum value threshold, which is still being consulted on, will be published in the final quarter of 2023.

The PSR said its new rules will be imposed on the Faster Payments System, a quick payments system used by banks to transfer sums in real time up to the value of £1m. This is where the majority of APP fraud takes place.

The Financial Services and Markets Bill, currently making its way through Parliament, will allow the watchdog to compel firms to reimburse victims and is expected to receive Royal Assent this year. The reimbursement requirements will then come into effect from 2024.

MPs have questioned the long delay on making reimbursement mandatory. The Treasury Committee, a group of MPs, first called for it in 2019. In February, the Treasury Committee called the delays “unacceptable” and said that mandatory reimbursement must be fully implemented by the end of this year.

Andrew Griffith, Economic Secretary, said: “This is an important step in the Government’s fight against fraud.

“As payment scams become ever more sophisticated, it is right that the Government, the regulator and industry work together to ensure victims are not left out-of-pocket by fraudsters.

“In parallel, the Government is looking at how to enable banks to have the ability to identify and pause suspicious payments inflight where appropriate.”

Last month, the Government announced a major crackdown on organised scam gangs, including a ban on cold calling to sell financial products and a clamp down on number spoofing, with the aim of reducing fraud by 10pc on 2019 levels by 2025.

Home Secretary Suella Braverman promised at the time to stop “text scam misery”, noting that fraud accounts for 41pc of all crimes across England and Wales.

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