Banks to be forced to pay back millions of fraud victims in days under new rules – what it means for you

BANKS and building societies will be forced to refund victims of fraud within five days under new proposals.

The new rules will help better reimburse victims of authorised push payment (APP) scams which is the biggest type of payment fraud in the UK.

APP scams happen when someone is tricked into making a payment, often due to criminals posing as a legitimate organisation such as a bank, HM Revenue and Customs (HMRC) or the police.

Scammers may also pretend to be selling goods or services that do not exist.

Brits who fell victim to APP fraud lost a combined £485million in 2022, according to UK Finance.

But the Payment Systems Regulator (PSR) said that there will be new rules around Faster Payments – the payment system across which the vast majority of APP fraud currently takes place.

Most victims of APP fraud will be reimbursed within five business days and there will also be additional protections for vulnerable customers.

High street banks and building societies as well as smaller payment firms will all need to sign up to the new rules.

Many banks are already signed up to a voluntary reimbursement code, but there have been concerns that this is not always being applied consistently.

The PSR plans to consult on the ability to apply a claim excess and the maximum level of reimbursement in the coming months.

The Financial Services and Markets Bill, which is expected to receive Royal Assent later this year, will allow the PSR to direct firms to reimburse customers.

All new rules are then expected to come into force at the start of 2024.

Chris Hemsley, managing director at the PSR, said: "Once implemented, our changes will deliver a major shift from the status quo, giving everyone across the payments ecosystem a reason to act to prevent fraud from happening in the first place.

"That means everybody who makes payments can do so with much greater confidence, knowing that they will be better protected against fraudsters."

A spokesman for Pay.UK, the payment system operator for Faster Payments, said: "The PSR's reimbursement regime will mean better outcomes for innocent victims of fraud.

"We're pleased the PSR has said it will now use its powers to compel all banks and building societies which make and receive payments over the Faster Payment system to reimburse victims of APP scams when the regime goes live in 2024."

How to avoid scams

There are clear red flags to always keep an eye out for when you get a message you're unsure of.

If you receive a text or email asking for personal details, you can check if it's real by calling whoever it claims to be from - your bank, for instance, will instantly confirm if it's fraud and advise what to do.

Any bank, trusted organisation or public bodies like councils or the police would will never ask you to withdraw, transfer or send back money from your account.

If you think you have been a victim of a scam, you should report it as soon as possible.

There is no guarantee you'll get your money back, but banks will often compensate you if you can show you did not know the money would leave your account.

You can forward scam emails to report@phishing.gov.uk and should also contact your bank and report it to Action Fraud, which will give you a crime reference number.

Check if your bank is signed up to the voluntary APP code, which indicates it has pledged to reimburse customers that have been tricked into sending money to scammers.

If your bank is signed up and refuses to refund you, you can complain and ask it why it is not abiding by the code.

You may be able to report the case to the Financial Ombudsman Service, which could order your bank to compensate you.