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Scam victims denied refunds see decision overturned by Ombudsman

Written by: Sarah Davidson
The number of customers submitting complaints to the Ombudsman after their bank failed to reimburse them following a scam rose by a fifth in 2021/22, official data shows.

Current accounts were the most complained about product last year, with nearly 25,000 new cases, figures from the Financial Ombudsman Service revealed.

A substantial proportion of these complaints were from victims of scams, with most relating to authorised push payment fraud where people are tricked into transferring money into accounts that they believe are legitimate.

Complaints about authorised fraud rose by more than 20% to 9,370 in 2021/22 compared to 7,770 in the previous financial year, with the Ombudsman ruling in the complainants’ favour in around three quarters of scam cases seen.

The Ombudsman said: “Over the last year, we have also seen an increase in scams involving social media, and scams relating to fake investments.

“Based on analysis of our casework, the increase could be in part driven by people attempting to make additional income when they were on furlough during the Covid-19 pandemic.”

Earlier this year the Ombudsman confirmed plans to “help businesses adhere to the Contingent Reimbursement Model Code” which aims to reduce both the occurrence and impact of authorised push payment scams.

It was brought in during May 2019 and is designed to give people the confidence that if they fall victim to an APP scam and have acted appropriately, they will be reimbursed.

Nine banks have committed to adhere to the code, but today’s data suggests that not all current account providers are giving customers the benefit of the doubt when they report being scammed.

Nausicaa Delfas, interim chief executive and chief ombudsman of the Financial Ombudsman Service, said: “Over the past year, the Financial Ombudsman Service continued to help over two hundred thousand customers who had problems with financial businesses on issues across banking, lending, insurance and investments.

“In this period of economic uncertainty it is more important than ever that where problems do arise, they are addressed quickly. We are here to help to resolve financial disputes fairly and impartially.”

The figures show the Ombudsman received more than 35,000 complaints about customer service or administration across all financial products. Examples of this included a lack of attention to detail, and sending personal information to the wrong address.

Customers submitted 108,065 new complaints about banking and credit, with 33,127 relating to insurance, 16,276 about investments and pensions and 5,369 about payment protection insurance.

The Ombudsman said it expects to see more complaints related to increased living costs driven by high inflation rates and high fuel prices over the coming months.

“In addition, we may see a rise in people being unable to access credit, people being exposed to sophisticated scams, and people potentially finding themselves struggling with new and existing debts,” Delfas added.

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