UK Banks will be given new powers to delay and investigate payments that are suspected of being fraudulent, helping to protect consumers against scammers, the Treasury has announced.
New laws proposed by the UK Government this week 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.
£460m is lost to fraudsters in the UK each year, often targeting vulnerable individuals. “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,” said Economic Secretary to the Treasury, Tulip Siddiq.
Fraud accounts for over a third of all crime perpetrated in England and Wales, making it the most prevalent form of crime 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.
Which? Director of Policy and Advocacy, Rocio Concha, said this is a positive step in the fight against fraud. “While it should not affect the vast majority of everyday payments, it’s important that banks can delay a bank transfer and take action if they think a customer is being targeted by a scam,” she said. “These measures should be used in a careful and targeted way. Financial firms of all sizes should also ensure they share intelligence and work with the police and other authorities to shut down accounts used for fraud and pursue the criminals behind them.”
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 Treasury says 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.
