A new compensation regime for spiralling bank fraud due to start in just days includes allowing the finance giants to charge victims £100.
The right to levy this so-called excess charge is included under the rules yet the banks are divided on whether they will add to the misery of customers by imposing the charge.
The new compensation regime is already mired in controversy after finance giants lobbied the government and City watchdogs to bring down the cap on the maximum compensation available from £415,000 to £85,000.
The overall new system is designed to offer protection to the many thousands of Britons who have been conned by scammers pretending to be official bodies from the to solicitors, the police, and banks to transfer money to rogue accounts.
Around 200,000 Britons fall victim to the scam, which is known and Authorised Push Payment fraud, every year, with losses totalling some £460 million in 2023.
The right to levy this so-called excess charge is included under the rules (Image: Getty)
Yet in thousands of cases the push payment fraud loss is less than £100, which means a victim required to pay a £100 excess would effectively not get any of the loss back.
Liz Edwards, money expert at personal finance website Finder, said: “Based on 2023 figures, more than 58,000 cases would have resulted in no refund if all companies had applied the excess. £100 is a lot of money to many people, and banks need to be clear with customers where they stand.”
Industry data from UK Finance shows that 32 percent of push payment fraud cases are for amounts of £100 or less.
Not all banks and payment providers intend to charge an excess but have to contact customers in coming days to set out their position.
TSB, Nationwide, Virgin Money, Clydesdale Bank, Yorkshire Bank and AIB all told the Financial Times they will not be passing on any charges to customers who fall victim to scams.
NatWest said it may apply a fixed excess of £100 to the total amount reimbursed to customers. The bank said: “This [will be] assessed on a case-by-case basis and with regard to the specific circumstances of each customer.”
Metro Bank and payment service providers Modulr and Zempler all confirmed they would be charging the £100 excess in full. Under the new rules these charges cannot be passed on to vulnerable customers, who, due to their personal circumstances, are especially susceptible to harm.
Nicola Bannister, customer support director at TSB, said one-third of all fraud claims the bank received were for £100 or less, with purchase fraud scams that originate on social media making up a large part of the total.
“£100 can be a lot of money to somebody,” she said, adding that other banks should make it very clear whether or not they intended to apply the charges.
Other banks including Barclays, Lloyds, HSBC, Monzo, Starling, the Co-Operative Bank and Danske Bank said they had yet to finalise their position on excess charges, but intended to contact customers with updated terms and conditions before the new rules took effect on October 7.
UK Finance has logged a 12 percent rise in the volume of push payment frayd cases year on year. Under the current voluntary system of reimbursement, banks returned £287mn of money lost to victims, a reimbursement rate of 62 percent.