Credit, Collections & Insolvency News
Victims of bank transfer scams who have been denied refunds may be in line for compensation after the Lending Standards Board (LSB) found banks’ refund processes were flawed and ordered them to review old cases.
The LSB conducted a review into how banks including Barclays, Lloyds and NatWest were adhering to a code of rules on reimbursements introduced in May 2019 which says blameless victims should be reimbursed by their bank. UK Finance figures show over 120,000 people were tricked into transferring money to fraudsters last year, losing £3,800 each on average.
The voluntary code, launched in May 2019, sets out consumer protection standards to detect, prevent and respond to APP scams and provides a commitment to reimburse customers who lose money where they were not to blame for the success of a scam. An APP scam occurs when a customer is tricked into authorising a payment to an account that they believe belongs to a genuine payee, but is in fact held by a scammer.
The LSB is responsible for providing independent oversight of signatory Firms to give assurance that the Code is being adhered to, breaches are identified and remedied and, that it delivers fair outcomes for consumers.
The recent review undertaken by the LSB included all Firms signed up to the Code at the point of its inception. The summary report published today, sets out the LSB’s findings and recommendations, including how Firms have interpreted and applied the requirements of the Code for reimbursing customers; its effectiveness in delivering fair outcomes for consumers; and the consistency of approach across signatory Firms having regard to the circumstances of the individual and the scam.
The LSB noted that all Firms have taken positive steps to implement the requirements of the Code for reimbursing customers and showed a willingness to work through a continually improving process to ensure a correct approach. The LSB also recognised instances of where the Code was applied correctly resulting in good practice.
However, key areas for improvement were identified relating to reimbursement processes, identification of vulnerability, effective warnings, and record keeping, with a need for more consistent approaches required across these areas.
Emma Lovell, Chief Executive of the LSB, said “Our review shows areas of good practice and strong evidence that, when applied correctly, the CRM Code is working. Where improvements need to be made, we have issued recommendations to individual banks and these are currently being worked through by firms. Fundamentally, we want to see banks taking all of the required steps to protect consumers, while ensuring fair outcomes for those that fall victim to a scam. Banks have reaffirmed their commitment to this.”
Katy Worobec, Managing Director of Economic Crime at UK Finance, said “The banking and payments industry is wholly committed to defending its customers from authorised push payment (APP) fraud and stopping stolen money going to criminals. The APP Code, developed on a voluntary basis by firms together with consumer groups, has established stronger customer protection standards and has more than doubled the proportion of losses being refunded. However, any customer who is unhappy with the outcome of a case can of course take their complaint to the Financial Ombudsman Service.”
“Since its introduction last May, signatory firms have been working hard to ensure they deliver their commitments under the Code and are continually improving as their experience grows. The role of the Lending Standards Board in identifying good practices and helping to ensure consistency across the industry is welcomed, and this report provides an important resource for firms.”
“With criminals seeking to take advantage of the Covid-19 outbreak, it remains vital that customers follow the advice of the Take Five to Stop Fraud campaign and stop and think before they ever part with their money or information.”