The Lending Standards Board (LSB) says banks must urgently improve the way they apply a code that reimburses bank transfer scam victims.
The LSB warned of systemic failings and said firms must work without delay to ensure the best outcomes for customers. It has written to the Chief Executives of banks which have signed up to the code, saying issues highlighted in a previous review have not been fully addressed. These include concerns over consistency around reimbursement processes, identification of customers’ vulnerability, effective warnings about scams, and record keeping. The voluntary code was launched in 2019 to reimburse people who have been tricked into transferring money in situations where neither they, nor their bank, is to blame. Concerns have been raised about banks applying the code in different ways. There have also been calls for greater transparency from banks over their scam reimbursement rates.
The Lending Standards Board (LSB) latest report detailing findings regarding the implementation of a provision of the Contingent Reimbursement Model (CRM) Code for Authorised Push Payment (APP) scams, which looks at signatory firms’ approach to the reimbursement of customers.
The Code, launched in May 2019, sets out consumer protection standards to detect, prevent and respond to APP scams. Signatory firms make a commitment to reimburse customers who lose money in cases where they were not to blame for the success of a scam.
The follow-up and accompanying report assessed firms’ progress on required actions from the previous thematic review, finding that progress has not been as the regulator expected, as well as identifying further areas of concern.
The initial thematic review included all firms signed up to the Code at the point of its inception. In April 2020, the LSB, governing body of the Code, published the review report highlighting some areas of good practice, but also four key areas of improvement which were detailed in individual firm reports containing required actions. These related to consistency around reimbursement processes, identification of vulnerability, effective warnings, and record keeping.
In addition to these key themes not being fully addressed since that review, further areas of concern have been identified. These include claim investigations exceeding the time requirements outlined in the Code, inconsistency in information given to victims of scams, and disproportionate responsibility being put on customers who make a claim.
As well as issues with individual firms’ application of the Code, the LSB has stated that systemic failings are present, and that work must be undertaken by signatory firms without delay to ensure the best outcomes for customers.
To ensure the actions raised from the review are given the highest priority within firms, Emma Lovell, Chief Executive of the LSB, has written to the Chief Executive of each signatory firm, reinforcing the importance of acting swiftly to remediate the findings.
Speaking about the review, Lovell said “Firms must act immediately to implement the recommendations that were issued to them in the original review and those now raised in the follow-up. Timebound action plans are in place and firms are clear on our expectations as governor of the Code.
“Together with our full review published earlier this year, we have evidence that when the Code is applied correctly, it provides much-needed protection for customers. We will continue to collaborate with the industry to increase the number of firms signed up to the Code and we would urge firms who are not already signed up, to consider the contents of this report and review their arrangements for dealing with APP scam cases.”
The review forms part of a range of activity that the LSB is undertaking following its full review of the Code earlier this year.