By Lauren Howells.
Fraud victims who are conned into sending money to a scammer will soon be able to complain to the bank that received their money, as well as the bank that sent it.
New rules published by the Financial Conduct Authority at the end of last week, mean that from 31 January 2019, victims of Authorised Push Payment (APP) fraud – a scam which involves the fraudster tricking the victim into sending money to the scammer’s account – will be able to complain to the bank which holds the fraudster’s account.
At the moment, victims of this type of fraud can only complain to the bank which has sent the cash.
Victims will also be able to complain to the Financial Ombudsman Service if they are not satisfied with the outcome of their complaint.
According to UK Finance data on APP fraud, there were 43,875 cases of APP fraud in 2017 and total losses of £236 million.
Super complaint by Which?
The FCA and Payment Systems Regulator (PSR) investigated APP fraud following a super complaint by Which? made in September 2016, where Which? expressed concern about the level of protection available to victims of APP fraud.
In its complaint, Which? concluded that banks were “not doing as much as they could be doing to protect consumers from sophisticated scams that trick consumers into transferring money to a fraudster”.
Which? noted that, unlike with other payment types, the liability for these scams was on the consumer and none on the banks. It said that the banks were “typically better placed to address the risks arising from their bank account holders being scammers”.
As a result of this complaint, the FCA and PSR concluded that receiving payment service providers (PSP), who are usually banks, could do more to identify fraudulent incoming payments and prevent accounts from being compromised by scammers.
APP fraud is a “growing problem”
The FCA said that it shares concerns with the PSR and the industry that APP fraud is a growing problem.
Christopher Woolard, Executive Director of Strategy and Competition at the FCA said: “The FCA takes APP fraud and the harm it causes to consumers very seriously.
“Now victims of APP fraud can make a complaint to the PSP receiving their payment and if they’re not satisfied with the outcome, can refer their complaint to the Financial Ombudsman Service.”
In addition, a new voluntary industry code is currently being developed by a steering group established by the PSR. According to the FCA, this code aims to set standards for PSPs to prevent and respond to APP fraud and reimburse victims of APP fraud in certain circumstances.