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Bank customers ‘better protected’ against fraud with three-day investigation law

Bank customers ‘better protected’ against fraud with three-day investigation law
Matt Browning
Written By:
Posted:
03/10/2024
Updated:
15/10/2024

From 31 October, banks will have 72 hours to investigate a suspicious payment with your account, the Government announced.

The new law gives power to banks to delay payments for a longer period than its current one-day limit.

Before the legislation, banks would either have to refuse or make the payment by the end of the following business day.

If you are involved in a payment regarding which banks have “reasonable ground” to suspect a payment has been made to a scammer, the provider will have to inform you and explain what needs to be done so you can unblock the payment.

The bank will have to cover any accrued interest or late payment fees incurred as a result of the investigation.

The proposals were first launched in March and were slated to be made law by 7 October, but the Treasury confirmed it would take 21 days for the legislation to come into force. Meaning it will become law on 25 October.

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It coincides with the new rules from the Payment Systems Regulator (PSR), where payment service providers will be mandated to reimburse victims of authorised push payment (APP) scams in the vast majority of cases.

The occasions a payment may not be refunded is when the bank deems the customer has acted carelessly by ignoring warnings that appear when making the transfer. However, this threshold will be extremely high.

While the legislation will increase the likelihood of refunds made to victims of fraud, the maximum payment account holders can claim has been “watered down” from £415,000 to £85,000.

This should still support 99% of all APP fraud cases in the UK, which rose by 12% to 232,429, taking £459.7m out of the pockets of victims.

APP scams occur when a scammer impersonates a trusted source or business to convince someone to transfer money to them.

Rocio Concha, Which?’s director of policy and advocacy, said it is “a positive step in the fight against fraud”, which Government statistics show represents a third of all crimes in the UK.

Concha added: “While it should not affect the vast majority of everyday payments, it’s important that banks can delay a bank transfer and take action if they think a customer is being targeted by a scam.

“These measures should be used in a careful and targeted way. Financial firms of all sizes should also ensure they share intelligence and work with the police and other authorities to shut down accounts used for fraud and pursue the criminals behind them.”

Ben Donaldson, UK Finance’s managing director of economic crime, said: “UK Finance has long called for firms to be allowed to delay payments in high-risk cases where fraud is suspected, and we are delighted to see proposed new laws supporting this.

“This could allow payment service providers time to get in touch with customers and give them the advice and support they need to avoid being coerced by the criminals who want to steal their money. This could potentially limit the psychological harms that these awful crimes can cause and stop money getting into the hands of criminals.”