Bank customers will be left vulnerable to fraudsters who trick them into transferring their money, the consumer body Which? has claimed, as it accused the payments regulator of letting banks off the hook.

Which? said the Payment Systems Regulator had not done enough to make banks responsible for reimbursing the tens of thousands of customers who have suffered losses as a result of fraudulent money transfers.

The consumer group was reacting to the work conducted by the PSR after a “super-complaint” the consumer group had made in September about the rise of fraud over the phone, internet and on mobile devices.



The PSR said banks could do more to identify potentially fraudulent payments but that it did not intend to make banks’ liable for losses from what are known as authorised push payments (APP). It intends to do further analysis on whether banks should be held responsible and shift the burden away from consumers.

Alex Neill, managing director of Which? home & legal services, said: “The regulator has finally acknowledged the considerable consumer harm caused by bank transfer scams. However, while recognising that the industry is not doing enough, it has failed to adequately address the issue of liability and has let the banks off the hook, giving them little incentive to do more to protect their customers.

“The outcome for people is unfortunately that they will continue to be scammed out of millions of pounds. We need to see swift action and not see this kicked into the long grass in the second half of 2017,” said Neill.



Which? made the super-complaint in September when it raised concerns that the sums consumers were being tricked into transferring were “often large and can be life-changing”. The consumer body had argued that placing more liability on banks for the losses from such scams would create efficient incentives for banks to develop systems to better manage risks.

The Guardian has highlighted a case of a couple losing £25,000 from fraudster who posed as their builder and set up a copycat email address.

The consumer body described how the scam worked in two ways, either by fraudulent access to a consumer account or where the customer is deceived into authorising payment to the scammer’s account. The payment is almost instant and can take place over the phone, via online banking, or in person.

In response, the PSR set out three possible ways to clamp down. These require banks to work on how they can share customer data to help money be reclaimed. There would also be a common approach to dealing with scams and collection of data to establish the extent of the fraud.

Hannah Nixon, managing director of the new regulatory body, acknowledged scamming was a growing problem. “Tens of thousands of people have, combined, lost hundreds of millions of pounds to these scams, but the data we have seen so far is incomplete. We need a concerted and coordinated industry-wide approach to better protect consumers, and we need it to start today,” she said.

While the PSR will not make banks liable for losses immediately, it said it would keep monitoring the situation. “As work progresses and additional evidence comes to light, we will consider whether it is appropriate to propose changes to the obligations or incentives that banks have for these types of scams,” the PSR said.



Nixon said that while Which? had called for banks to be made liable it was not that simple. Changes are already underway to the way payments are made with a “confirmation of payee” system being introduced so that a sort code and account number is typed in to transfer some money, an instant message appears to check that the recipient is the one intended.

“There is no silver bullet, but more can be done to prevent these scams in the first instance, and to respond faster when it does happen, in order to give consumers more support and help in recovering their money,” said Nixon.

The Financial Conduct Authority, which also looks after the interests of consumers, said it would work with firms to tackle concerns about the banks sending the payments and the banks which receive them. Christopher Woolard, executive director of strategy and competition, said: “Financial crime is a priority for the FCA and we will work to eliminate fraud by whatever means.”