Tag: banks

Which? calls for mandatory transfer scam protections

Which? is calling for vital fraud protections to be made mandatory, as the consumer champion reveals more than £1 BILLION is estimated to have been lost to bank transfer scams in just three years.

With measures set to come in that should significantly reduce the amount of money lost to this type of fraud, Which? is also raising concerns that some banks are not committed to introducing the protections on time, or even at all.

Which? analysed bank transfer fraud statistics since the start of 2017, a few months after it first highlighted the threat from these devastating scams with a super-complaint.

The projected total lost since then, based on current trends, now stands at a staggering £1.1 billion, according to the research.

During that period, the sums lost to this type of scam, also known as authorised push payment (APP) fraud, have risen rapidly, while the payments regulator and banks have been slow to introduce much-needed protections for consumers.

According to Which?’s projections, £97 million could have already have been lost in the first three months of this year alone.

Alarmingly, analysis suggests that almost a third of the total losses since 2017, equating to £320 million, could have been prevented if a simple system of checking names on bank transfers had been in place during that period.

This important measure – known as confirmation of payee (CoP) – is finally due to be introduced by most of the UK’s major banks by the end of March.

CoP ensures that a check is made on whether or not the name a customer enters when making a payment matches the account details it is being sent to. It helps to stop fraudsters from posing as trusted organisations such as a bank or solicitor and tricking people into making payments to them.

The Payment Systems Regulator (PSR) has only directed the six biggest banking groups to sign up by 31st March, but Which? believes all banks must join the scheme in order for it to be effective.

The consumer champion asked all banks when they planned to introduce Confirmation of Payee.

Of the banks that have been directed to sign up, RBS Group (including Royal Bank of Scotland, NatWest and Ulster Bank) and HSBC (including First Direct) were unable to confirm a specific date when asked if they would be ready by the regulator’s deadline.

On the other hand, Lloyds Banking Group is ahead of the pack, implementing CoP from 2 March 2020 for Bank of Scotland customers, before rolling it out to Halifax and Lloyds customers throughout the rest of this month.

Of the banks that haven’t been directed to sign up by the regulator, several have said that they plan to deliver the system by the end of the year.

However, Metro Bank told Which? that it has no current plans to implement CoP at all – despite this being a requirement of the voluntary industry code on APP scams launched in May 2019, which Metro Bank signed up to.

It did not elaborate on why it is does not intend to introduce CoP, but says the voluntary code gives customers significantly increased protection against authorised push payment scams.

Metro Bank said: “We take our customers’ security extremely seriously and have a range of safeguards in place to help defend them against fraud, which we constantly review and update in light of increasingly sophisticated tactics from fraudsters.

“We have no plans to implement Confirmation of Payee currently, but can reassure our customers that they will continue to be protected. Metro Bank is a voluntary signatory of the Contingent Reimbursement Model Code, giving customers significantly increased protection against authorised push payment scams.”

Amid concerning reports of banks failing to follow the code’s rules around reimbursing blameless APP scam victims, Which? is concerned that a voluntary approach to ensuring victims are treated fairly is no longer viable.

The next set of UK Finance figures on bank transfer scams is due for release in the coming days. It should show an increase in the amount of money being reimbursed to victims of bank transfer fraud, as banks signed up to the code begin implementing the greater protections it offers.

Which? believes the code and CoP should be made mandatory and that the government must consider directing the PSR to ensure all banks are signed up. The consumer champion is also encouraging all consumers to put pressure on their bank to sign up to both the code and CoP.

Gareth Shaw, Head of Money at Which?, said: “The UK has been in the grip of a fraud crisis for years, but new security measures offered by the banking industry should finally give people better protection against increasingly sophisticated fraudsters.

“At the end of this month, we should get a true sense of how well the industry is tackling the issue. It is vital for all banks to commit to basic name-check security, and the whole industry should sign up and follow through on the protections offered by the scams code.

“If the banks fall short of making these commitments themselves, these initiatives must be made mandatory by the government.”

The cost of cash

The UK’s banks have made hundreds of millions of pounds from cash machine cuts and bank branch closures in the last two years, while fees paid by consumers to access their own cash have soared, research from Which? has revealed.

New figures obtained by the consumer champion show the amount paid by consumers to withdraw cash jumped by £29m to £104m last year – as many free machines vanished or were converted to charge fees.

In contrast, this seismic shift in the cashpoint network has saved the banks £120m since January 2018, according to the new figures from Link, which runs the UK’s largest cashpoint network.

More than 8,700 free ATMs have closed since changes to how the Link cashpoint network is funded were pushed through with no regulatory oversight in January 2018, following lobbying by the banks.

Between 2018 and 2019 the percentage of fee-charging machines jumped by 37 per cent (from 11,120 to 15,277) and they now comprise a quarter (25%) of the entire network of 60,291 machines  – leaving countless communities having to pay up to £2 just to withdraw their money.

These changes have seen the number of times people have had to pay to withdraw cash increase from 46m in 2018 to 73m in 2019 – a rise of 59 per cent in a single year.

The banks are also saving vast sums through branch closures – with 1,203 having closed since January 2018 alone. These ongoing closures have drastically reduced people’s ability to access free withdrawals across the UK.

Which? first raised the alarm in December 2017 that incoming cuts to the way cashpoints are funded would lead to a rapid reduction in access to free withdrawals across the country.

And two years on these new figures show the sheer mismanagement of the cash landscape, which is seeing people cut off from cash – or forced to pay significant fees to access it.

Which? previously revealed that deprived areas are losing free cash machines at a much faster rate than affluent ones across the UK – hitting those who can afford it the least.

Digital banking and payments have brought many benefits to consumers in the UK, but it’s crucial that the transition is better managed to ensure all those still reliant on cash aren’t forced to pay just to access it.

Which? is calling on the government to intervene with legislation that protects free access to cash for as long as it is needed.

Gareth Shaw, Head of Money, Which?, said: “Massive cuts to the UK’s bank branch and cash machine networks have been highly lucrative for the big banks – but highly costly for millions of consumers. Entire communities have been cut off from cash or forced to pay hefty fees to access their own money.

“Banks must take greater responsibility for ensuring customers are supported to make the transition to digital if branches close and that those who are reliant on cash are not left behind by changes to the banking landscape.

“The Budget is a major opportunity for the government to introduce much-needed legislation that protects access to cash and free withdrawals for as long as this vital payment method is needed.”

Which? – Banks are denying reimbursement to innocent scam victims, despite new rules

Which? is concerned by early signs that some of Britain’s biggest banks are refusing to reimburse blameless victims of devastating transfer fraud, despite the introduction of new industry standards intended to protect fraud victims.

Banking customers lose life-changing sums every day through bank transfer scams – with Which? even hearing from a victim who lost £500,000 through his restaurant business.

It was hoped that the introduction of a voluntary industry code in May 2019 would ensure that all blameless victims get their money back, finally reversing the trend of people being left out of pocket.

But Which? has heard from a number of people who say they have been denied reimbursement unfairly – with a worrying trend emerging of banks relying on fraud warnings to justify not refunding customers. These decisions from banks fly in the face of the voluntary code most banks have signed up to, which pledges to reimburse all blameless victims.

It is now much more common for online or mobile banking customers to see fraud warnings when transferring money, as banks seek to meet new code standards by introducing a range of different features aimed at making a customer think twice about whether they are being scammed.

However, a Which? survey found that almost half (49%) of people are not even aware that new fraud warnings had been introduced by banks – further evidence that victims should not be arbitrarily turned down for reimbursement because they have “ignored warnings”.

Case study – Michelle, 38, London

Which? spoke to Michelle, 38, who lost almost £33,000 after responding to a text message about a ‘suspicious payment to Airbnb’ in August 2019. It appeared to come from Lloyds Bank’s usual phone number, sandwiched between two genuine messages, so she called the number supplied. Over the course of an hour Michelle was persuaded to transfer her money to a new account, in the belief that hers had been hijacked by criminals.

Lloyds says although it has sympathy for Michelle it will not reimburse her, on the grounds that she ‘did not take sufficient steps to verify that either the text message or the person she spoke to on the phone were genuine’, and that she authorised the payments despite receiving ‘specific warnings’ stating that Lloyds would never ask a customer to move money to other banks.

Michelle had no reason to believe the text was fake, and Lloyds is yet to explain the ‘sufficient steps’ she ought to have taken. And, while she did notice an online warning about fraud when she made the first payment, the criminal on the phone was able to quickly dismiss her concerns.

She said: “It was very urgent and compelling. My two-year-old daughter was running around while I was on the phone to them for an hour. I saw the warning about Lloyds never asking me to move money into a safe account and flagged this over the phone. They assured me that these were not “safe” accounts but “new” accounts.”

Which? has advised Michelle to escalate her case to the Financial Ombudsman Service.

Which? – working with two leading academics – also analysed the effectiveness of banks’ fraud warnings, to establish whether they are adequately ‘understandable, clear, impactful, timely and specific’ – as set out in the code.

The experts raised concerns about elements of the warnings from some of Britain’s biggest banks.

One researcher voiced concerns over the ‘generic’ messages displayed by First Direct, HSBC, Lloyds, Natwest and Royal Bank of Scotland. Petko Kusev, from Huddersfield Business School, said that it was perfectly rational for customers to ignore generic information when conducting bank transfers.

A second researcher, Patrick Fagan from Goldsmiths University, suggested that some warnings can come too late, as once people have already been targeted by scammers they typically commit to seeing the action through. Mr Fagan suggested that banks use targeting and personalisation to make these warnings more persuasive.

Which? supports the introduction of fraud warnings as an important defence in preventing scams. However, Which? believes that banks must prove their fraud warnings are fit for purpose and should not be used as a means to simply deny reimbursing blameless victims. If a bank can’t prove its warnings are effective then the customer should not be deemed at fault.

The consumer champion also wants the industry code to be made mandatory for all current account providers as many providers still haven’t signed up to the vital fraud protections.

Jenny Ross, Which? Money Editor, said: “People are losing life-changing sums of money every day to devastating bank transfer fraud – so it’s shocking that some current account providers still haven’t signed up to offer their customers vital protections.

“All banks must prove that their online warnings are up to scratch – especially if they are denying victims reimbursement, as we’ve seen in some cases.”

The consumer champion put banks’ fraud warnings under the spotlight, and found:

  • Asking customers to tick a box to confirm they have understood the warning could prove more effective than warnings that take consent for granted.However, Which? believes this is still a low bar for establishing consent.

  • Nationwide’s ‘STOP AND THINK’ message ahead of a transfer was deemed to be effective at providing customers with concrete, clear imperatives.

  • Which? is critical of HSBC’s approach that gives customers the option of hiding warnings, raising the likelihood that customers might not see them at all.

  • Meanwhile, customers could easily miss important wording and rush through a transfer if it is towards the bottom of a screen, such as First Direct’s warning.

Banks that have not signed up to the code:

Bank of Ireland, Citibank, Clydesdale and Yorkshire Bank, Danske Bank, First Trust Bank, Monzo, N26, Tesco Bank, and Virgin Money. Although TSB is not a signatory of the code, it promises to reimburse all victims of fraud under its ‘Fraud Refund Guarantee’, launched on 14 April 2019.

The Lending Standards Board is responsible for overseeing the new voluntary code and assessing how firms are implementing the standards set out in the code.

Politicians urge Santander branch closures rethink

Santander bank has confirmed that it is to close 140 branches across the UK. Three branches in Lothian are to close: Morningside Road and Leith Walk in Edinburgh and George Street in Bathgate. Continue reading Politicians urge Santander branch closures rethink

Letters: Taking Back Control

Dear Editor

When the banks collapsed through financial mismanagement and corruption in 2008 the people of the UK had to pay for this massive example of this failure of capitalism.

Wages were frozen, prices soared, thousands of jobs were lost, and both local and national services were decimated.

All this continued from 2008 to 2016 non-stop – and it is still going on today. People had had enough and were demanding that the banks should be under public control and stricter controls over the financial institutions should be introduced.

Danger signals from the banks and financial sector were very quickly raised: the demands of the people of the UK for control over these sectors must somehow be headed off.

It took a few years for the media to convince the people to blame others for the troubles, but they succeeded in splitting the nation practically down the middle, a classic example of the ‘divide and rule’ tactic.

The consequences of the phoney arguments in support of the EU referendum are yet to be felt.

Taking back control was advanced as an objective of the referendum, but in whose hands would control be? People had decided that in 2008 and will do so again.

A. Delahoy

Silverknowes Gardens 

Speak out on bank closures, urges Holyrood committee

Edinburgh has lost 60% of it’s bank branches in just seven years

The closure of more than a third of Scotland’s banks since 2010 is set to come under the microscope, as the Scottish Parliament’s Economy, Jobs and Fair Work Committee calls on local businesses and consumers to ‘speak out’ on the impact on local communities and economic growth. Continue reading Speak out on bank closures, urges Holyrood committee