Bank customers could soon be hit with a £100 charge as new fraud rules come into place next week. Under the proposed rules of the compensation scheme for victims of bank fraud, which is set to take place on October 7, banks will have the option to impose this excess fee.
While certain banks have flat-out refused, others are yet to decide their position on the matter. The scheme has already been under fire after the maximum compensation limit was successfully slashed from an initial £415,000 down to £85,000.
It’s intended to shield countless Brits who’ve been conned by crooks masquerading as everyone from HMRC operatives to legal professionals and even the cops. The key goal is to offer a safety net for the unwary when they’re duped into making payments to fake accounts.
Roughly 200,000 UK residents annually get caught out by what’s termed Authorised Push Payment (APP) scams, facing combined staggering losses of around £460 million in 2023 alone. However, imposing a £100 excess for fraud under this amount could essentially rob many of any recompense.
Stats from UK Finance reveal that a significant 32 percent slice of APP fraud episodes involve amounts at or below the £100 threshold. In the forthcoming days, payment service providers and banks that may not levy the excess fee still have to make their policies clear to customers.
TSB, Nationwide, Virgin Money, Clydesdale Bank, Yorkshire Bank, and AIB have all confirmed to the Financial Times that they will not be passing on any charges to customers duped by fraudsters. In contrast, NatWest is contemplating a fixed £100 excess for reimbursing customers, with the caveat: “This [will be] assessed on a case-by-case basis and with regard to the specific circumstances of each customer.”
Metro Bank, along with payment service providers Modulr and Zempler, are set to enforce the full £100 excess charge. Under new rules, these costs cannot be levied on vulnerable customers who are at an increased risk of harm due to their personal circumstances.
Nicola Bannister, TSB’s director of customer support, disclosed that a third of the bank’s fraud claims involve amounts of £100 or less, often linked to purchase scams from social media sites. She highlighted the significance of this amount, saying “£100 can be a lot of money to somebody,” and called on other banks to clarify their stance on excess fees.
A slew of other major banks, including Barclays, Lloyds, HSBC, Monzo, Starling, the Co-Operative Bank, and Danske Bank, have not yet made public their policies regarding excess charges. However, they intend to inform their customers about changes to terms and conditions ahead of the new regulations taking effect on October 7.
UK Finance has noted a 12 percent rise in the number of push payment fraud cases year on year. With the current voluntary reimbursement scheme, banks have given back £287m to victims, which translates to a reimbursement rate of 62 percent.
Rocia Concha, Which? director of policy and advocacy, spoke out against the change, noting that a reduced reimbursment cap could “reduce the incestives for banks and payments firms to take fraud prevention seriously.”
She added: “The regulator has shamefully sidelined scam victims, despite the evidence showing that this decision could have a negative financial and psychological impact on them.”