Scottish banks under fire for failing to reveal how they reimburse victims of wire transfer scams
A new study finds that many are still not ready to voluntarily release data to ensure customers are treated fairly and consistently.
The main UK banks and building societies have been contacted to urge them to commit to publishing their repayment rates by Friday May 28, two years after the introduction of an industry code to which to many banks have subscribed, which undertakes to reimburse losses to victims who are not at fault.
However, almost all banks have not – including Edinburgh-based Tesco Bank, owners of RBS Nat West Group, and owners of Bank of Scotland Lloyds Banking Group.
Search by consumer organization Which? who said Barclays was the only company to say they were ready to release “periodically” and last month provided reimbursement figures for the first two months of the year.
This made it the only organization outside of the Edinburgh-based TSB, which is not a member of the code but has a ‘fraud reimbursement guarantee’, to provide information on the amount of money that it goes back to customers who have been victims of this type of scam.
Who is now urging the payment systems regulator (PSR) to push forward its proposals to force companies to release the data.
Currently, information about the reimbursement levels that individual banks provide to customers under the Code of Scams is published anonymously – with reimbursement rates between companies last year ranging from a low of 18% to a low. maximum of 64%, depending on the PSR.
In contrast, TSB says it reimburses 99 percent of customers. Barclays said its figure was 74% for the first two months of 2021.
Who said that banks that are not part of the voluntary code “are even less scrutinized, and there is no clarity on the amount of money returned to customers by companies, even anonymously.”
“We believe that the complete lack of transparency in how individual banks treat customers leads to unfair and inconsistent decisions, which means companies can easily shirk their responsibility to reimburse victims, and contributes to low levels of reimbursement under code scams, ”he said.
He says the industry response shows the regulator has “no choice but to act on its proposals to improve business transparency on how they deal with wire transfer scams, including reimbursement.
“Stricter consumer protections, which all businesses must follow, are also needed to correct an unfair and inconsistent industry approach to reimbursing blameless victims,” he said.
“Banks should publish data beyond reimbursement rates if it is necessary to prove what they are doing to prevent and manage cases of wire transfer scams. We’re also saying that posting data doesn’t pose a significant fraud risk for businesses and could actually help drive improvements that reduce scams.
While the regulator says there is a ‘possibility’ that there is a link between high levels of fraud prevention and low reimbursement rates, Which? client “is often wrong.
“This was underlined by the Financial Ombudsman Service (FOS), which says it continues to maintain a “high proportion” of wire transfer scams. The decisions published by the FOS have shown examples of companies placing unrealistic expectations on customers to detect that they are victims of a scam, or that the warnings put in place are not enough.
“And rather than distracting from crime, the TSB has found that since the introduction of its guarantee, victims are willing to provide much more detailed information about their case, which helps inform preventive measures. bank fraud. ”
Among those not considering releasing its reimbursement rates, Edinburgh-based Tesco Bank said it felt that, taken in isolation, it presents a one-dimensional view of the problem, does not help consumers understand the problem. The effectiveness of banks’ ability to prevent push payment fraud (APP) in the first place, and is a limited measure of a bank’s effectiveness in dealing with the problem.
She said she would prefer to see at least equal attention to APA prevention measures as well as reimbursement rates, and believes it is essential that all banks report on the same principles in order to provide consumers with a comparison. unambiguous performance.
He said he agreed with UK Finance’s response to the PSR consultation on behalf of the industry, where they recommend publishing statistics on the origin of scams, as this would give consumers a set of metrics broader and more useful regarding APP fraud.
Owners of RBS, the Nat West Group said: “We will continue to publish our industry level data through UK Finance. ”
Bank of Scotland owners Lloyds Banking Group added: “We have submitted a response to the PSR call for opinions on this topic and look forward to the results of the industry-wide consultation.
“We are fully committed to reimbursing victims of scams in accordance with the voluntary code and have returned significant sums to victims of fraud since its entry into force.
“Winning the fight against fraudsters is a team effort and prevention obligations should be extended to all banks as well as online platforms and telecommunications companies where the majority of scams usually start.”