Banks to be given new powers to protect consumers against scams
LONDON, England – UK banks will be given new powers to delay and investigate payments that are suspected of being fraudulent, helping to protect consumers against scammers, says HM Treasury, in a press release on October 3, 2024.
“New laws proposed by the government 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.”
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.
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.
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.”
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