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Some UK banks are returning money lost by customers to fraud in less than 10 per cent of cases, despite overall reimbursement rates rising across the sector, the industry’s regulator has found.
Last year digital bank Monzo, Danske Bank and AIB fully refunded customers in less than 10 per cent of reported cases of “authorised push payment fraud”, in which victims are tricked into sending money to fraudsters from their bank accounts, said the Payments Systems Regulator.
In total, reimbursement has jumped from 61 per cent of money lost in 2022, when the regulator first compiled its ranking, to 67 per cent in 2023, while some banks are returning lost funds in full in more than 90 per cent of reported cases.
Nationwide, TSB and Barclays had fully refunded customers in 96, 95 and 82 per cent of reported cases of APP fraud, respectively.
“We can see some positive changes with more victims being reimbursed” said PSR managing director David Geale. “But there is still more to do — particularly for some smaller firms which have much higher rates of receiving fraud than larger firms.”
The regulator plans to make fraud reimbursement mandatory for APP fraud claims worth up to £415,000 from October.
“While there have been some improvements, fraud victims are still facing a reimbursement lottery and some firms are clearly way off the pace,” said Rocio Concha from Which?. “Today’s figures clearly show these new rules cannot come soon enough and must not be delayed.”
The plans to make reimbursements compulsory have sparked a backlash from industry and politicians who say they risk encouraging more complicit fraud and harming smaller fintech players.
The row saw the former head of the PSR step down this year after then-City minister Bim Afolami told the Financial Times there were “significant problems” with the proposed rules.
Trade body UK Finance welcomed the overall increase in fraud reimbursement and highlighted the fact that the financial services sector was the only one to reimburse fraud victims at all, despite about 90 per cent of scams starting online or over the phone.
“The technology and telecommunications sectors bear no responsibility for reimbursing victims,” said Ben Donaldson, managing director for economic crime at UK Finance. “That needs to change and these sectors also need to tackle the criminal activity that proliferates on their platforms, sites and networks.”
Britons lost £460mn to APP fraud last year, according to UK Finance, 70 per cent of which involved ordered goods that never materialised.
The new Labour government is facing growing calls from the industry to review the upcoming fraud reimbursement rules. It has also drafted plans to make tech companies liable to reimburse victims of online fraud alongside banks, the FT previously reported.
On Thursday, a coalition of companies including Barclays, BT, Nationwide, NatWest, Starling, Three UK, Virgin Media O2 and Vodafone also urged ministers to do more to foster data sharing among industry, law enforcement and government to help better prevent scams.