Around four million people in the UK have been caught out by authorised push payment fraud at some point in their lives. This is when they’re conned into authorising a transfer of money from their account to another account which they believe belongs to a legitimate payee.

The average victim loses £1,387, according to a study by payments solution Shieldpay.

However, despite efforts by regulators to improve levels of compensation by banks – including a voluntary code introduced last year – victims are still being left thousands of pounds out of pocket.

Analysis by Shieldpay reveals victims face a £3bn compensation shortfall in total.

Peter Janes, chief executive of Shieldpay, said: “The industry must do more to protect consumers.

“The voluntary code is a positive step but compensating victims is simply firefighting without tacking the source of the problem. Fraudsters must be stopped in their tracks and consumers protected against transferring money into accounts which are held by scammers.”

Which banks have signed up to the code?

Banks are currently not obliged to refund customers who unwittingly authorise a transaction. The code, which came into force last May, is strictly voluntary.

Nine banks have now signed up to it: Barclays, HSBC, including First Direct and M&S Bank, Lloyds Banking Group, including Halifax, Bank of Scotland and Intelligent Finance, Metro Bank, NatWest, including RBS and Ulster Bank, Nationwide, Santander, Starling and The Co-operative Bank.

Under the code, banks commit to reimbursing victims who lose money to push payment fraud when it was through no fault of their own.

TSB pledged last year to fully reimburse victims of all kinds of banking fraud.