Banks pledge to use new fund to reimburse blameless scam victims tricked into bogus money transfers

According to consumer watchdog Which?, banks which have committed to signing up to the code include Royal Bank of Scotland, Barclays, Lloyds Banking Group, HSBC, Metro Bank, NatWest, Santander and Nationwide.

Which? says £674 is typically lost every minute to this “devastating” crime – with victims having faced a “gruelling battle” to get their money back in the past.

Some 84,000 bank customers lost money - sometimes tens of thousands of pounds - last year after being caught out.

Only a fraction of the amount lost was refunded by banks, and while some £354m was lost in this fraud to individuals and businesses last year, only £83m was refunded.

Sophisticated authorised push payment (APP) scams trick people into transferring money, perhaps because they think they are paying a bank, a business or HM Revenue and Customs (HMRC).

People who have transferred large sums of money to fraudsters are typically told that nothing can be done because it was they themselves who have authorised their bank to make the payment.

Banks only tended to reimburse people if there was an obvious fault in the way the payment was handled by the bank.

Today’s new code means it is hoped that customers making payments are not penalised even in circumstances where the customer’s bank has done everything reasonably expected of it to protect the customer.

Now, big industry players have committed to provide initial funding for these “no-blame” situations until the end of 2019.

The larger financial institutions involved in the new scheme will contribute to a pot, which any of the seven signatory banks can draw on to refund people when neither the individual nor the bank is to blame.

Trade association UK Finance has said the initial no-blame funding is intended to provide the necessary time for the industry to work with the regulators and government to deliver sustainable long-term funding for this reimbursement fund by January 2020.

A decision on whether someone is refunded should be taken within three weeks, or within seven weeks for complicated cases. Disputed cases that go to the Financial Ombudsman Service will take much longer to resolve.

Stephen Jones, chief executive of UK Finance, said: “Protecting customers from the threat of scams and stopping money going to criminals are amongst the finance industry’s foremost priorities.

“Over the last year, the industry has been working in partnership with consumer groups, including Which?, to develop the code, which helps strengthen standards for customer protection and reimbursement.

“The new code delivers a commitment from all firms who sign up to it to reimburse victims of authorised push payment scams in any scenario where the customer has met the minimum standards expected of them under the code.”

He said the industry will continue to “fight fraud on every front”, including investing in advanced security systems and new ways to track stolen funds and supporting the government in improving how intelligence is shared.

Which? has said losses to bank transfer fraud are “spiralling out of control”, with £354m lost in the past year alone – most of it stolen from personal accounts.

Gareth Shaw, head of money at Which?, said: “Three years after Which? launched a super-complaint highlighting the devastating impact of bank transfer fraud, it’s good that consumers are finally getting greater protections and many should be spared from losing life-changing sums of money.

“The code will be judged a success if it halts this worsening crime and results in all blameless victims being fairly and swiftly reimbursed – and we want to see all remaining banks signing up as a bare minimum to reassure their customers that they will be protected

“Banks must now ensure vital name check security measures are introduced on time and quickly agree long-term funding plans for all reimbursements – as there can never be a return to the dark days of banks turning away the victims of this ruinous crime.”

Chris Hemsley, co-managing director of the Payment Systems Regulator, said: “APP scams can have a devastating impact on the people who fall victim to them.

“The code is a major step up in protections and it reflects our strong belief that if somebody has done everything they can reasonably do to protect themselves, they should be reimbursed.

“I welcome the commitment that these banks have made to their customers.”