TSB becomes UK’s first bank to provide ‘Fraud Refund Guarantee’

TSB has today announced a UK banking first, a Fraud Refund Guarantee, to ensure the bank’s 5.2 million customers are protected if they are an innocent victim of fraud – whether it’s unauthorised transactions on their accounts or customers tricked into authorising payments to fraudsters.

TSB’s announcement marks a significant step-change in banking, where today customers are only refunded for fraud losses in limited circumstances. Moving forward, TSB’s customers will be refunded for any loss they’ve suffered from their account as a result of third-party fraud.

The move may also be seen as part of a new charm offensive after the announcement in February that TSB had suffered a loss of £105.4 million before tax in 2018, down from a profit of £162.7 million the year before, as it faced the impact of multiple IT system meltdowns last year and a subsequent loss of account holders.

The bank said its financial performance was “heavily impacted by the IT migration and subsequent service disruption”, leaving it facing £330.2 million in additional post-migration costs and foregone income.

However, bank fraud across the sector is a rapidly growing problem and has a devastating effect on consumers across the UK. As people are increasingly going digital and online shopping has doubled over the past five years, the propensity for fraud has also increased as has the sophisticated means by which consumers are targeted – with one in four Brits falling victim to online fraud last year.

Statistics released by UK Finance show that over £1.2 billion was stolen by criminals committing bank fraud last year.

TSB’s executive chairman, Richard Meddings said: “The vast majority of fraud claims across UK banking are from innocent victims of fraud, who have been targeted by criminals and organised gangs. However, all too often these customers must fight to be refunded and are not treated as victims of crime. 

“We want to provide peace of mind to our customers, that’s why we’re proud to announce the TSB Fraud Refund Guarantee. If a TSB customer innocently suffers a fraud loss on their account after being targeted by a criminal, we’ll cover it.”

TSB said its Fraud Refund Guarantee is just one of the many ways that it is tackling the issue of fraud head-on. The lender is taking a targeted approach to combat fraud which includes:

    • Prevention through increased fraud education reaching local communities right across the UK;
    • Protecting Customers through multi-million-pound investment in fraud detection measures; and
    • Pursuing Fraudsters by partnering with local police forces to hunt down the criminals that target consumers. TSB’s partnership with local police forces has resulted in multiple arrests and successful prosecutions.

 TSB’s Fraud Refund Guarantee comes a month after banks and building societies agreed to do more to protect customers, introducing a new voluntary code which comes into effect on 28 May.

But consumer watchdog Which? said banks needed to do more.

“Other High Street banks are leaving their customers unprotected. All banks must now follow TSB’s lead and ensure that their own customers are not left paying for the cost of this crime,” said Jenny Ross, Which? money editor.