Banks told to improve treatment of fraud victims

The Financial Conduct Authority (FCA) has expressed disappointment with banks’ anti-crime systems and their treatment of fraud victims.

The FCA’s review found that banks were not fully considering customer vulnerabilities when handling fraud claims and complaints. Customers were provided with unclear and confusing decision letters, with some containing accusatory language. The FCA is working with firms to improve poor complaint handling and long response times. The review also revealed that authorised push payment (APP) fraud losses reached £239.3m in the first half of 2022, with reported cases rising by 22%. The banking sector returned over £152m to victims in the first half of the year, but the Payment Systems Regulator found disparities in how banks treat victims.

The FCA says firms can do more to strengthen their systems designed to detect and prevent fraud.

Previous UK Finance research found that in the first six months of 2023 over 116,000 people reported falling victim to APP fraud, where someone is tricked into sending money to a fraudster posing as a genuine payee.

Anna Roughley, Head of Insight at the Lending Standards Board said “Victims of APP scams often face lasting emotional and psychological distress, so there is an urgent need for the industry to focus on fraud detection and prevention. The FCA has emphasised the need for payments service providers to continue to develop their defences against fraud and ensure their control frameworks are fit for purpose, reinforcing the need to maintain an industry Code that has a clear focus on the prevention and detection of APP fraud.”

“The industry must do all it can to ensure scams are prevented, while providing an increased level of protection for vulnerable customers.”