Banks given new powers to tackle threat of fraud

Banks will be allowed to extend the maximum delay for payments they deem suspicious as part of new powers to protect consumers against scams.

In cases where there are reasonable grounds to suspect a payment is fraudulent, new laws proposed today by the Government will extend the time that payments can be delayed by 72 hours.

Fraud accounts for over a third of all crime perpetrated in England and Wales, making it the most prevalent form of crime commitment in the country. This has been driven by a rise in purchase scams and the emergence of “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.

Current rules dictate that banks must either process or refuse a payment by the end of the next business day. However, the Government is hopeful that the new laws to extend the time allowed to delay a payment will tackle the estimated £460m that was lost to fraud last year alone.

“Hundreds of millions of pounds are lost to scammers each year, targeting vulnerable communities and ruining the lives of ordinary people,” Economic Secretary to the Treasury, Tulip Siddiq, said. “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.”

Banking trade body UK Finance, which has long been calling for firms to be allowed to delay payments in high-risk cases where fraud is suspected, has welcomed the new proposals.

“This could allow payment service providers time to get in touch with customers and give them the advice and support they need to avoid being coerced by the criminals who want to steal their money,” managing director of economic crime at UK Finance, Ben Donaldson, added.

“This could potentially limit the psychological harms that these awful crimes can cause and stop money getting into the hands of criminals.”



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