It said awareness programmes by the financial services industry had been “ineffective” and insufficiently funded, and set out a series of recommendations for changes.

The influential group of MPs also hit out at how the government has handled the issue noting its response had been “too slow” and that it was now too big for it to handle alone.

In its report into online fraud, the committee said: “Urgent action from government is needed, yet the Home Office’s response has been too slow and the banks are unwilling to share information about the extent of fraud with customers.

“The balance needs to be tipped in favour of the customer. Online fraud is now too vast a problem for the Home Office to solve on its own, and it must work with a long list of other organisations including banks and retailers, however it remains the only body that can provide strategic national leadership.”

Banks not doing enough

On banks, the committee was direct and uncompromising in its criticism: “Banks are not doing enough to tackle online fraud and their response has not been proportionate to the scale of the problem. Banks need to take more responsibility and work together to tackle this problem head on.”

“Banks now need to work on information sharing so that customers are offered more protection from scams. Campaigns to educate people and keep them safe online have so far been ineffective, supported by insufficient funds and resources.”

The report also called for the Home Office to make banks more responsible: “The department must also ensure that banks are committed to developing more effective ways of tackling card not present fraud and that they are held to account for this and for returning money to customers who have been the victims of scams.”

Investing hundreds of millions

Trade body UK Finance said it was not happy about the current safeguards for sharing data.

Chief executive, Stephen Jones, said: “The banking sector is committed to preventing customers falling prey to financial scams, investing hundreds of millions every year to tackle this growing issue and preventing £6 out of every £10 of fraud.

“The fight against fraud and scams requires public and private sector organisations to work together. Sharing information between institutions is an essential part of the fight but current legislation does not provide adequate safeguards to allow this.

“We want to build on our current close partnership with the government and regulators to make the changes necessary to protect customers and prevent more scams without slowing down genuine transactions, and to make it clearer to customers when they can expect a refund if they have been the victim of payment fraud,” he added.