Does the new Banking Code of Conduct Mean that You’re Now Safe from Fraud ?
Sadly, it doesn’t.
In the words of Which? “Bank transfer fraud is spiraling out of control”. This is when you send money to a fraudster from your bank account, either because they are posing as someone else or for goods and services that never arrive.
How big a problem is it?
Massive. Last year victims lost £354 million and only £83 million was clawed back and according to recent data the problem is growing at 40% per year.
The good news
Since the 28th May some of the banks have introduced a new voluntary code to help victims. Barclays, Lloyds, HSBC, Metro bank, RBS, Santander and Nationwide have all signed up. Furthermore, TSB has gone a step further and introduced a fraud guarantee for its customers to protect against fraud losses.
So, no worries then?
Firstly, with the new banking code, you could be refused a refund if:
- You ignored warnings about fraud and scams when setting up payee or before authorising payment
- You were not careful enough in finding out if the person receiving the payment was legitimate
- If you were “grossly negligent”
- You are found to be claiming dishonestly.
- You cannot appeal to the bank, if refused you must appeal via the Banking Ombudsman
Because the code has only just been introduced its impossible to say how well it is going to work in practice. But many experts are worried about the worrying amount of wriggle room in the definitions and the delay in introducing payee verification for payments. With the TSB guarantee things do look better. But there are exceptions:
- Any losses from pre 14th April are not covered
- If you are repeatedly affected by fraud and ignore advice
- If the customer is involved in committing the fraud
Clearly the TSB guarantee is much more comprehensive but with 1 in 3 of us likely to be victims of fraud this year the possibility of being a repeat victim is quite real.
So, what can I do? The best defence is still to prevent yourself from being caught out.
Data from UK Finance Fraud the Facts 2019
As you can see to the left, payment redirection scams are by far the biggest concern. Fraudsters targeting consumers and posing as solicitors, private schools, builders and other tradesman often intercepting emails or using compromised email accounts. Use the Reassura Golden Rule #8, if someone asks you to change payment instructions always give them a call to check. For more information on each of these scams checkout the Reassura Library for online guides and videos.
It is too early to tell if the new code is going to make a real difference and until payee verification is introduced there is still a lot of doubt in the system. TSB are the pioneers at the moment, and it will be interesting to see how that evolves. But ultimately, we all still need to protect ourselves, stay aware of the latest scams, learn how to stay safe and talk with our friends and family so that we share knowledge.