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Banks commit further funding to compensate blameless scam victims

Paloma Kubiak
Written By:
Paloma Kubiak

Scam victims will continue to receive help from banks to get their money back after funding for a voluntary refund scheme was extended to the end of the year.

A number of banks signed up to a voluntary scheme which reimburses victims of Authorised Push Payment (APP) scams. This is when consumers are tricked into transferring money to a seemingly legitimate account but it is in fact controlled by a scammer.

The majority of the banks have also provided the funding for the scheme which launched in May 2019 but a long-term solution and calls for the scheme to be mandatory continue to be discussed.

While they committed to fund the scheme until the end of March 2020, they have now confirmed interim funding until 31 December 2020. This will allow more time for regulators, government and industry to deliver a long-term sustainable funding arrangement, according to UK Finance.

Under the ‘no-blame’ voluntary code, customers of the banks (see list below) who fall victim to such scams, where both the provider and customer have taken necessary steps to prevent fraud, will be reimbursed.

In the first half of 2019, consumers lost £208m to APP scams.

Stephen Jones, chief executive of UK Finance, said: “The banking and payments industry is committed to defending their customers from fraud and stopping stolen money from going to criminals. The APP scams voluntary Code has set stronger standards for payment service providers to help protect customers; however there is a responsibility on all industries, not just banking and payment providers, to do more to stop these criminals from being able to target customers.

“There is strong agreement across our sector that the development of any sustainable funding solution to compensate victims of scams must also include those third-party organisations whose data and platforms are used by criminals to facilitate fraud. The agreement to continue the interim funding arrangements until the end of this year gives important time for this to be agreed and implemented.”

Providers signed up to the reimbursement code:

There are nine financial institutions, representing 19 brands:

  • Barclays Bank UK PLC
  • The Co-operative Bank plc, including Smile
  • HSBC Bank plc, including First Direct and M&S Bank
  • Lloyds Banking Group, including Lloyds Bank plc, Halifax, Bank of Scotland, Intelligent Finance
  • Metro Bank plc
  • National Westminster Bank Plc, including Royal Bank of Scotland, Ulster Bank
  • Nationwide Building Society
  • Santander UK plc, including Cahoot, Cater Allen Limited
  • Starling Bank.