Bank rule change will see some customers hit with £100 charge (original) (raw)

Bank customers could be hit with a £100 charge as new fraud rules come into effect today. The changes to the compensation scheme for victims of bank fraud, set to start on Monday, October 7, will allow banks to impose this excess fee.

While some banks have outright rejected the idea, others have not yet revealed their position. The scheme has already been criticised after the maximum compensation limit for fraud was reduced from an initial £415,000 to just £85,000.

The goal of the scheme is to safeguard people who have been duped by fraudsters pretending to be everyone from HMRC staff to legal professionals and even police officers. The primary aim is to provide a safety net for those tricked into making payments to fraudulent accounts.

Each year, around 200,000 UK residents fall victim to what's known as Authorised Push Payment (APP) scams, with combined losses estimated at around £460 million in 2023 alone. However, imposing a £100 excess for fraud claims could effectively deny many any compensation. For money-saving tips, sign up to our Money newsletter here

This is because data from UK Finance reveals that a significant 32% of APP fraud cases involve amounts at or below the £100 threshold. In the coming days, payment service providers and banks that may not impose the excess fee still need to clarify their policies to customers, reports the Daily Record.

TSB, Nationwide, Virgin Money, Clydesdale Bank, Yorkshire Bank, and AIB have assured the Financial Times that they will not be introducing any fees for customers tricked by scammers. In contrast, NatWest is considering a £100 excess charge for reimbursements, but said: "This [will be] assessed on a case-by-case basis and with regard to the specific circumstances of each customer."

Meanwhile, Metro Bank, along with payment services Modulr and Zempler, are set to enforce the full £100 fee. The forthcoming regulations dictate that such fees cannot be imposed on individuals deemed vulnerable who are at increased risk owing to their personal situation.

TSB's lead on customer assistance, Nicola Bannister, revealed that roughly one-third of the bank’s fraud claims involved amounts of £100 or less, commonly linked to purchase scams occurring on social networks. Highlighting the significance of this amount, she said: "£100 can be a lot of money to somebody," and urged other banks to make their policies regarding excess charges clear.

Whilst several major banking institutions including Barclays, Lloyds, HSBC, Monzo, Starling, the Co-Operative Bank, and Danske Bank have not made their plans about excess fees public, they have said they intend to update their customers of any alterations in terms and conditions ahead of the October 7 deadline when the new guidelines come into effect.

UK Finance has noted a significant 12% surge in the volume of push payment fraud cases year on year. Under the current voluntary reimbursement scheme, banks have managed to return £287m to scam victims, which equates to a 62% rate of reimbursement.

Rocia Concha, Which? director of policy and advocacy, has openly criticised the amendments. She cautioned that a reduced reimbursement cap might "reduce the incentives for banks and payments firms to take fraud prevention seriously." She added: "The regulator has shamefully sidelined scam victims, despite the evidence showing that this decision could have a negative financial and psychological impact on them."

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