Banks may sabotage plans to reimburse scam victims, MPs warn
Lawmakers are set to scrutinise plans to force banks and building societies to pay back victims of scams amid concerns banks may sabotage the plans with misleading delays, a committee announced today.
The Payment Systems Regulator (PSR), which oversees the UK’s payments ecosystem, has tabled proposals that will require banks to reimburse victims of scams in a bid to force lenders to ramp up their protection of customers.
But in a statement today, the Treasury sub-committee on financial services regulations said it was now set to investigate the proposals to scope out whether they could actually be implemented.
“While the regulator’s proposals are certainly a positive move in the right direction, questions remain, particularly around the interaction between the regulator and the industry body, Pay.UK,” said Harriett Baldwin MP, Chair of the Sub-Committee on Financial Services Regulations.
“We are worried that banks could attempt to delay reimbursing their customers.”
The sub-committee asked the PSR last month how it would prevent banks from delaying payments by routinely alleging that consumers have been grossly negligent.
Concerns have also been raised over whether the Financial Ombudsman Service (FOS) has capacity to rule on these decisions, and whether sanctions would be slapped on firms which routinely allege gross negligence wrongly.
MPs will now quiz the payments regulator alongside the Pay.Uk and the FOS over the workability of the plans next month.
The proposals come after a surge in fraud in the UK through the pandemic which saw Brits scammed out of record amounts, although numbers have since settled back to normal levels.
In the first half of this year, criminals made off with a total of £609.8m through authorised and unauthorised fraud and scams, a decrease of just under 13 per cent compared to the first half od 2021, according to UK Finance. Advanced security systems used by banks also prevented just under £584m from being stolen, UK Finance said.
The UK is still the “card fraud capital of Europe” though, however, according to the Social Market Foundation, with the most victims per 1000 people and the highest losses.