Call for banks to come clean on scam losses
The consumer champion found banks are not prepared to voluntarily publish data to ensure customers are treated fairly and consistently.
Which? contacted the UK’s major banks and building societies urging them to commit to publishing their reimbursement rates by Friday 28 May. This marked two years since the introduction of an industry code that many banks have signed up to, which pledges to reimburse losses to victims who are not at fault.
However, almost all banks failed to do so. Barclays, which last month provided reimbursement figures for the first two months of the year, was the only firm to say it was ready to publish “periodically”.
This leaves it as the only organisation apart from TSB, which is not a member of the code but does have a ‘Fraud Refund Guarantee’, to provide any information on the amount of money it returns to customers who have fallen victim to this type of scam.
As a result of the responses from across the industry, Which? is urging the Payment Systems Regulator (PSR) to push through with its proposals to require firms to publish the data.
Currently, information about the levels of reimbursement individual banks provide to customers under the scams code is published anonymously. Reimbursement rates across banks last year range from a low of 18% to a high of 64%, according to the PSR.
In contrast, TSB says it reimburses 99% of customers. Barclays said its figure was 74% for the first two months of 2021.
Banks that are not part of the voluntary code face even less scrutiny, and there is no clarity about how much money is being returned to customers by firms, even on an anonymous basis.
Which? believes the complete lack of transparency in how individual banks are treating customers is leading to unfair and inconsistent decisions. This means that firms can easily wriggle out of their responsibility to reimburse victims, and is a contributing factor to low levels of reimbursement under the scams code.
When asked, the banks gave various excuses for not publishing the data. One said it “would not give a full picture of an organisation’s ability to prevent fraud and protect its customers”. Another claimed that “a low reimbursement rate could signify that a bank has high levels of fraud prevention and that the scams that do get through could be more likely to involve customer error”.
While the regulator says there is a “possibility” that there is a connection between high levels of fraud prevention and low reimbursement rates, Which? believes firms’ interpretation of “customer error” is often flawed.
The Financial Ombudsman Service (FOS) continues to uphold a “high proportion” of bank transfer scam cases. Decisions published by the FOS have shown examples of firms placing unrealistic expectations on customers to spot they are being scammed, or that the warnings put in place are not sufficient.
Gareth Shaw, head of money at Which?, said: “Banks are continuing to hide behind a cloak of anonymity instead of demonstrating their commitment to protecting customers from the devastating impact of bank transfer fraud by publishing their reimbursement rates.
“Without greater transparency, inconsistent and unfair treatment of scam victims will continue, and the chances of having their losses returned will remain a lottery.
“This situation cannot continue. The Payment Systems Regulator must now take action and order all firms to publish this information regularly and in full, as part of a range of measures to resolve the systemic problems with how victims of this crime are handled.”
Ashley Hart, head of fraud at TSB, said: “We firmly believe that customers deserve to know how their bank performs on the important issue of fraud refunds; especially at a time of such contrasting practices across the industry – and we echo Which?’s calls for transparency.
“TSB’s Fraud Refund Guarantee means our customers are more willing to have open and honest conversations about fraud when they realise they will not be blamed for being a victim to crime. This greatly helps our fraud prevention and pursuit measures – as we advise the public on emerging scams and share detailed information with police forces to go after the criminals behind these attacks.”