Tag: banks

New powers for banks to combat fraudsters

Banks to be given new powers to protect consumers against scams

  • New rules extend maximum delay for suspicious payments by 72 hours
  • Gives banks more time to investigate and break the spell of fraudsters

Banks will be given new powers to delay and investigate payments that are suspected of being fraudulent, helping to protect consumers against scammers.  

New laws proposed by the Government today will extend the time that payments can be delayed by 72 hours where there are reasonable grounds to suspect a payment is fraudulent and more time is needed for the bank to investigate.  

This will give banks more time to break the spell woven by fraudsters over their victims and tackle the estimated £460 million lost to fraud last year alone.

Economic Secretary to the Treasury, Tulip Siddiq said: “Hundreds of millions of pounds are lost to scammers each year, targeting vulnerable communities and ruining the lives of ordinary people.  

“We need to protect these people better, which is why we are giving banks more time to investigate suspicious payments and break the criminal spell that scammers weave.”

Minister of State with Responsibility for Fraud, Lord Sir David Hanson said: “Fraud is a crime that can devastate lives, and anyone can be affected.  

“That’s why measures like this are so crucial to provide banks the investigative powers they need to better protect customers from this appalling crime.”

Fraud accounts for over a third of all crime perpetrated in England and Wales, making it the most prevalent form of crime commitment in the country. This has been driven by a growing number of purchase scams and the emergence of so-called ‘romance scams’, where victims target vulnerable people and trick them into transferring large amounts of money by pretending to be interested in a romantic relationship.  

The new rules will help protect people against these types of scams by allowing banks up to an additional 72 hours to investigate suspicious payments. Currently banks must either process or refuse a payment by the end of the next business day.

Which? Director of Policy and Advocacy, Rocio Concha said: “This is a positive step in the fight against fraud. 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.”

UK Finance Managing Director of Economic Crime, Ben Donaldson 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.”

Banks who have reasonable grounds to suspect a payment is fraudulent will need to inform customers when a payment is being delayed. They will also need to explain what the customer needs to do in order to unblock the payment.  

The need for evidence to trigger a delay will help protect people and businesses from unnecessary payment delays. Banks will also be required to compensate customers for any interest or late payment fees they incur as a result of delays.

British public are missing out on £17 billion a year from banks profiteering by offering low interest rates

  • Brits have on average £24,500 in savings account, after putting away £260 every month
  • UK savers say that their average interest rate is 3.3%, 1.95% below the Bank of England’s rate
  • Despite this, only 23% of savers have switched accounts in the last year to capitalise on better interest rates
  • 7 out of 10 brits (71%) feel that banks profits are too high

Smart money app Plum is calling out banks for profiteering from high interest rates and not passing interest back onto savers.

Despite recent hikes in the Bank of England’s base interest rate, which currently stands at 5.25%, many UK banks have been slow to adjust their savings account rates accordingly. This has left consumers feeling short changed and struggling to make the most of their money.

New research from Plum shows that the average UK saver is putting away £260 in savings each month, with a total of £24,500 in their savings accounts. In addition, the research found that the average Brit is getting 3.3% interest on their savings account, 1.95% under the base rate. This means that on average, customers are losing out on £478 in interest per year1, equating to a hefty £17 billion across UK savers2.

Despite savers being able to gain higher interest rates by switching, the majority of savers (77%) hadn’t done this. They cited similar rates between banks (28%) and liking their current banks (30%) as the biggest barriers, even though 71% of people felt that banks profits were too high.

The biggest motivator for saving was for an emergency fund (49%), with holidays coming in second (44%). Saving up to buy a house or for home improvements was the biggest motivator for people under 45 (47%) and for the 55-64 age bracket, saving for retirement was their biggest priority (51%).

In July this year, the FCA set out a 14-point action plan to ensure banks and building societies are passing on interest rate rises to savers appropriately, with those that fail to justify their pricing decisions by the end of 2023 set to face robust action from the FCA.

Victor Trokoudes, Founder and CEO of Plum, said: “While banks have been quick to increase interest rates on loans and mortgages, they have been sluggish in boosting interest rates on savings accounts.

“We are in the midst of a cost-of-living-crisis and consumers are continuing to face financial pressures. So it’s really disappointing to see that many banks are not passing more of this money back onto customers, effectively devaluing their hard earned savings.

“While the FCA has pledged to take action against this behaviour by the end of 2023, it’s by no means a silver bullet. Borrowers are paying more while savers see minimal benefits, highlighting that the business models of the major banks are inherently misaligned with the interests of their customers. 

“The Bank of England has raised rates 14 times since December 2021, and they are expected to remain high. That’s why it’s so important that the public know that they don’t need to stand for this and allow banks to take their deposits for granted. We’ll be offering a new service that better reflects these base rate changes so their money can work harder.”

Plum, which has already helped people to set aside £2bn, is launching a new product that allows people to earn higher returns that are more closely aligned to the Bank of England base rate

Cost of living crisis: Help is available for those who need it, says FCA

The Financial Conduct Authority (FCA) has reminded borrowers they can get help from their lenders if they are struggling to keep up with payments, as it found the number of people struggling to meet bills and credit repayments has risen by 3.1m since May 2022 (10.9m, compared to 7.8m in May 2022).  

The number of adults who missed bills or loan payments in at least three of the last six months has also gone up by 1.4 million, from 4.2 million to 5.6 million over the same period.  

The FCA has repeatedly reminded firms of the importance of supporting their customers and working with them to solve problems with payment, including by writing to industry bosses to make sure they are aware of the regulator’s expectations.   

Where firms haven’t supported their customers properly, the FCA has told them to make changes. It reminded 3,500 lenders of how they should be supporting borrowers in financial difficulty and told 32 lenders to make changes to the way they treat customers. This work has led to £29 million in compensation being secured for over 80,000 customers.    

As part of its Financial Lives survey, the FCA found that the cost of living is having an impact on people’s mental wellbeing. Around half of UK adults, or 28.4 million people, in January 2023 felt more anxious or stressed due to the rising cost of living than six months earlier.    

Sheldon Mills, Executive Director of Consumers and Competition said:  ‘Our research highlights the real impact the rising cost of living is having on people’s ability to keep up with their bills, although we are pleased to see that people have been accessing help and advice.  

‘If you’re concerned about your finances, you do not need to worry alone. We’ve told lenders that they should provide support tailored to your needs. And, if you find yourself in debt or want to know more about how to manage your finances, free expert advice is available.  

‘We will continue to act quickly to make sure financial firms help their customers who are facing financial difficulty or are worried they might be soon.’    

The support needed to deal with the rising cost of living goes beyond what is provided by the financial services sector. As a result, the FCA continues to work with other regulators and debt organisations to drive better coordination and help make sure customers are treated fairly and supported if they get into financial difficulty.  

The FCA will also be introducing the Consumer Duty in the summer. The Duty will be the driving force behind its consumer protection work, as it will require firms to act to deliver good outcomes for consumers and make sure that they are properly supported while using a financial product or service. 

Research: Financial Lives January 2023: Consumer experience of the rising cost of living – the burden of bills and ways to get support

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The Edinburgh Reforms: Chancellor to announce package of financial reforms during visit today

  • Chancellor to announce reforms to drive growth and secure the UK’s position as world leading financial services hub in Edinburgh today.
  • Ringfencing rules are set to be updated to release banks without major investment activities from the regime, regulators will be given a new remit to deliver growth and a widespread review will repeal hundreds of pages of EU law.
  • The Government will continue to deliver reforms across the economy to drive economic growth during challenging times.

Chancellor, Jeremy Hunt, will announce a package of over 30 regulatory reforms to secure the UK’s place as the world’s foremost financial centre during a visit to Edinburgh today,

The “Edinburgh Reforms” will build on the unparalleled strength of the UK’s financial services sector, taking advantage of the opportunities provided by the UK’s exit from the European Union to tailor regulations to suit the country’s needs.

Today the Treasury will publish its plan to rigorously review, repeal and replace hundreds of pages of EU regulation ranging from disclosure for financial products to prudential rules for banks, creating a tailor-made UK regulatory framework based on international best practice that balances burden on business with protection for the consumer.

Rules that hold back growth will be reviewed, with overbearing EU rules which put companies off listing in the UK being overhauled, among dozens of regulations within scope of the Financial Services and Markets Bill.

The Government will also announce changes to ringfencing rules which currently require major banks to separate their retail and investment arms, and retail banks have to comply even if they don’t have an investment arm, a time consuming regulatory exercise.

Reforms will cut red tape and boost banking competition in response to the Skeoch review by freeing retail focused banks from ringfencing rules while maintaining protections for consumers. The UK’s world leading regulatory regime has evolved over the past decade and will continue to protect consumers and safeguard financial stability.

Chancellor of the Exchequer, Jeremy Hunt said: “This country’s financial services sector is the powerhouse of the British economy, driving innovation, growth and prosperity across the country.

“Leaving the EU gives us a golden opportunity to reshape our regulatory regime and unleash the full potential of our formidable financial services sector.

“Today we are delivering an agile, proportionate and home-grown regulatory regime which will unlock investment across our economy to deliver jobs and opportunity for the British people.”

This builds on the reforms to Solvency II announced in the Autumn Statement which will unlock over £100 billion for productive investment from UK insurers over the next decade, such as clean energy infrastructure.

The Chancellor is also expected to issue new mandates to the Financial Conduct Authority and the Prudential Regulation Authority setting out how they will help deliver growth and promote the international competitiveness of the UK.

The financial services sector is vital for Britain’s economic strength, contributing £216 billion a year to the UK economy. This includes £76 billion in tax, enough to fund the entire police force and state school system, while employing over 2.3 million people – with 1.4 million outside London and 163,000 people in Scotland.

While in Edinburgh today, the Chancellor will meet with top financial services CEOs to discuss these reforms and how the sector can further drive investment and growth in the UK.

As confirmed in the Autumn Statement, the government will look to announce changes to EU regulations in four other growth industries by the end of next year, including digital technology, life sciences, green industries and advanced manufacturing.

Services restored at Santander

Santander has apologised to customers for a ‘techinal problem’ which saw customers unable to pay bills or access cash yesterday. The problem has now been resolved and the bank says some branches will open today.

In a statement issued last night Santander said: “All of our banking services are now working as normal.

“We are very sorry for the inconvenience you’ve experienced today. If you need help, some of our branches will be open on Sunday from 10am to 12pm. We’ll publish a list of these tomorrow.”

The bank has yet to fully explain the cause of the problem.

Gareth Shaw, Head of Money at Which?, said: “These technical issues will be causing stress for many Santander customers – with people reporting that they have been unable to make online payments or in some cases purchase food in their local supermarket.

“Customers can incur fines, penalties and fees when they’re not able to access their finances, so the bank must offer compensation to all those who have been impacted in this way.

“These problems demonstrate why it is vital that banks invest to ensure their systems are up to the task of protecting their customers’ accounts and maintaining the services they rely on.”

Which? urges banks: commit to cash

Which? is urging the UK’s eight largest retail banks to publicly commit to maintaining cash access for the millions of people in the UK who still rely on it, as its latest analysis shows that 13,000 cash machines have disappeared in just three years.

In a letter to the banks, Which? Chief Executive Anabel Hoult outlines how the coronavirus pandemic has exerted enormous pressure on the cash network, and calls for immediate action to safeguard access to cash to ensure that cash remains a viable payment option.

Which? research last week showed that nearly 10 million people are not ready – or able – to give up cash. However, despite legislation being announced to protect cash for these consumers at last year’s Budget, there is still no timetable in place for its introduction.

The delay has seen what was already a fragile system weakened even further, and last week LINK, the UK’s largest cash machine network, warned that unless action was taken the number of ATMs in the UK could halve in the next two years.

The slow pace of progress towards legislation has created a dangerous vacuum, in which cash machine and bank branch closures continue apace with little scrutiny or oversight to ensure the changes meet the needs of consumers as well as business.

While potential alternatives to mitigate these closures have been proposed, such as cashback without purchase from shops, the speed at which they are being developed and rolled out simply is not quick enough to stem the losses to the existing cash network that show no sign of slowing down.

Since the start of 2020, 3,300 free-to-use cash machines have closed across the UK. The overall number of ATMs in the UK has also fallen by 13,000 in the last three years, falling from 67,300 to 54,400.

In order to prevent yet more damage being inflicted as national restrictions continue, the consumer champion has given firms a two-week deadline to confirm that they will continue membership of two vital industry schemes in the interim period until legislation comes into force, with a regulator in place to ensure that it delivers for cash-reliant consumers.

These voluntary schemes are managed by LINK and the Post Office – both of which currently act as vital guard rails for the UK retail banking system, protecting the viability of cash withdrawal and basic banking services for millions of people. If one of the major retail banks were to withdraw their membership, neither would be viable.

This would mean that LINK’s financial inclusion programme, which is designed to improve access to cash for the most vulnerable and deprived communities, would be under threat, while consumers who live in areas where the Post Office is often the only remaining source for accessing cash would be forced to travel much longer distances to withdraw their money.

Research from the Financial Conduct Authority (FCA) last year revealed that during the first national lockdown, cash machine closures had already led to tens of thousands of people being cut off from local access to cash.

While these measures will not address all of the problems with the cash network, they are a critically important step in securing the viability of cash until longer-term solutions are agreed and implemented.

Which? is concerned that it will be extremely difficult to reintroduce access to cash in some communities should these voluntary agreements be undermined before legislation is introduced. The consumer champion is urging firms to recognise that a bank’s individual commercial decisions can have a profound impact on the wider cash ecosystem.

As well as this commitment from banks, Which? is also calling on the government to urgently set out its timetable for legislation, and press ahead with giving the FCA the responsibility to oversee the protection of cash in the UK to ensure that it remains a viable payment option as long as people need it.

Which? will provide an update on how banks have responded to our request for continued membership of these schemes once the deadline has passed.

Anabel Hoult, CEO of Which?, said: “Ensuring some of the most vulnerable members of society have the ability to access and spend the cash they rely on to pay for essential goods and services must be a priority for the government, the financial regulator and banks, not an afterthought.

“While there is no doubt that more people than ever are able to benefit from digital banking, that does not detract from the need to provide reasonable access to cash for the millions who need it.

“It is imperative that banks continue to be part of the existing access schemes in place to ensure that the availability of cash is not left to erode even further while legislation is being passed. The government now needs to clarify its timeline for when new laws will actually be in place to protect access to cash.”

Clydesdale no more

VIRGIN MONEY INVESTS IN NEW FLAGSHIP STORE IN SCOTLAND’S CAPITAL

  • New store first of its kind in Scotland
  • 55 Clydesdale Bank branches will rebrand to Virgin Money Stores
  • Entire nationwide network of stores will operate under the new Virgin Money brand by spring 2021

Virgin Money has opened its state-of-the-art flagship Store in Edinburgh as part of its UK wide store rebrand programme.

The new flagship store located at 83 George Street, is the latest example of Virgin Money’s innovative approach to what a bank branch can offer. Once Covid-19 restrictions have been lifted, customers will be able to experience the full range of the new store’s features, including  a space for entrepreneurs to co-work and create, a venue for events and much more as Virgin Money invests in UK high streets as part of its nation-wide rebrand.

The multi-million-pound rebranding of its national network of Clydesdale Bank, Yorkshire Bank and Virgin Money sites to the new Virgin Money branding will be completed by spring 2021, bringing all stores under a single brand.

Each rebranded store will offer full banking services to all 6.6 million customers in the Virgin Money Group, vastly increasing the network of available stores to existing Clydesdale Bank, Yorkshire Bank and Virgin Money customers. Over the coming months customers will also begin to see credit cards, banking apps and account statements change to Virgin Money as part of its wider rebrand activity.

Customers will continue to benefit from the same friendly and knowledgeable teams, providing excellent customer service and access to a wide range of Virgin Money products and services from current account to mortgages and credit cards. Customers will also have access to exclusive products and services from the wider Virgin Group of businesses.

Paul Titterton, Head of Personal Distribution at Virgin Money said: “These are exciting times for Virgin Money as we invest in our stores and move to a single brand for all customers.

“The new George Street store brings together the very best of digital banking with a unique offering on the high street. It’s a new chapter for our history, and our new approach to stores proves that a bank branch can be a buzzing creative space where businesses and people can come together.

“We can’t wait for the Covid restrictions to lift so customers can enjoy the full Virgin experience in our new Edinburgh store.”

As part of the programme 55 Clydesdale Bank branches will be rebranded to Virgin Money Stores across Scotland.

Virgin Money are in communication with its customers in advance of their own branch being rebranded to let them know about when they can expect the changes to be made.

FCA confirms temporary financial relief for customers impacted by coronavirus

The Financial Conduct Authority (FCA) has today confirmed a package of targeted temporary measures to help people with some of the most commonly used consumer credit products. 

Following a short consultation the FCA will be going ahead with the proposals outlined last week, which will give firms the flexibility under our rules to provide temporary financial relief to those facing payment difficulties during the coronavirus (Covid-19) pandemic.

Christopher Woolard, interim Chief Executive at the FCA, said: ‘We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic.

“The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time. The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.

‘Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so.

‘We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.’

The measures include firms being expected to:

  • offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by coronavirus
  • allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months
  • make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force
  • ensure consumers using any of these temporary payment freeze measures will not have their credit file affected

The rule changes will be in force from today and the full range of measures will apply by Tuesday 14 April 2020.

This is to allow firms time to ensure they have the appropriate level of resources available to handle customer requests. All firms will be ready to receive customer requests by 14 April, although some firms including the major banks and building societies, will be adopting the changes today.

Consumers should check firm websites or social media posts for more information, and where possible use online services to request assistance.

This will reduce the pressure on firm call centres who are experiencing a high demand in calls due to the current pandemic situation. If consumers need to get in touch by telephone please be patient and, if you can, wait until after the Easter weekend, even if your lender is offering help sooner than the 14 April 2020.

In response to the consultation, the guidance now includes clarification on which products are in scope. In particular, the FCA are confirming that the following products are covered: guarantor loans, logbook loans, home collected credit, a loan issued by Community Development Finance Institution and some loans issued by credit unions, but only where these are regulated. The guidance also applies to firms which have acquired such loans.

These measures won’t replace normal forbearance rules where these would be more suitable for a consumer in serious and immediate financial difficulty. Consumers in financial difficulty should contact the Money Advice Service (MAS) for further guidance.

The FCA will keep this guidance under review.

Which? urges clarity on financial help for bank customers

Which? is calling on the financial regulator to urgently provide greater clarity on temporary measures to help people struggling financially because of coronavirus, as new research reveals the huge toll the outbreak is expected to take on people’s finances.

A survey by the consumer champion carried out between 20-22 March, just before the government asked people to stay at home to stop the spread of coronavirus, highlights that significant numbers of people are expecting to struggle with their finances over the next year.

With the Financial Conduct Authority (FCA) set to introduce temporary measures tomorrow designed to help consumers falling into financial difficulty as a result of the crisis, Which? can reveal people of all levels of working status are now expecting their household finances to worsen over the next 12 months, with those who work part time reporting the highest level of concern.

Taking the proportion of people expecting their financial situation to get better and subtracting the proportion who expects it to get worse, confidence among part-time workers was at -56 percentage points. The figure stands at -36 for those in full time work.

Of those that are retired, confidence in the future of their household finances stood at -49 for those on a state pension only and -45 for those with a private pension.

The research also shows that consumer confidence in the economy has plummeted. When asked whether the economy would be better or worse in 12 months’ time, confidence fell from -17 in February to -78 in March.

Worryingly, the financial impact of coronavirus follows a period in which large numbers of people were already reporting having cut back on spending, with 39 per cent of consumers in 2019 reporting that they reduced spending on essential items or took money from savings to cover their spending.

This indicates that a significant number of people may have already been close to the point of relying on credit to help manage their personal finances, and the impact of coronavirus could have pushed them to the point where they now need to depend on existing credit cards, loans or overdrafts.

Measures proposed by the FCA last week, due to come into force on Thursday, are designed to provide a temporary solution for consumers who until now have been financially stable. These include a temporary payment freeze on loans and credit cards as well as zero interest on existing overdrafts up to £500, with both put in place for three months.

However, while Which? is generally supportive of the plans, reassurance is needed that the measures can be consistently applied for customers across all banks, and that customers who take up these options will be fully aware of any longer term implications of using them.

This requires the FCA to be as explicit as possible about precisely when the payment holiday period starts – whether it is from the proposed launch date of 9 April, or from the moment the consumer requests support at any point during those three months.

There also needs to be a clear, industry-wide exit strategy for the temporary measures, which must ensure that customers do not end up in unnecessary financial hardship.

There is particular concern about how consumers will be moved off of their £500 interest free overdrafts after three months.

The consumer champion says it is vital that banks do not immediately place consumers back to their original arranged overdraft and rates at the end of any holiday period, and the FCA should consider  “easing off” interest-free overdraft arrangements in a way that does not affect credit scores.

The consumer champion believes that greater transparency will make it easier for people to access services online and make it clear that only those in the most urgent need should seek to directly contact their financial institutions. This should reduce the burden on call centres, providing a greater chance of consumers getting the help they need in good time.

Gareth Shaw, Head of Money at Which?, said: “The impact of the coronavirus outbreak is going to cause a sharp shock to huge numbers of people across the country, and many who were previously in good financial health will now require help from their banks to see them through the coming months.

“While the FCA has taken positive steps to provide assistance, there needs to be urgent clarity so that banks can apply this support consistently for everybody who is eligible, and customers can decide whether these measures represent the best option available to them.”