We’re calling on the Payment Systems Regulator (PSR) to introduce new transparency requirements on banks so that customers can see exactly how they treat and reimburse victims of APP scams.
When you fall victim to a crime, you expect to be believed. If someone breaks into your house, you don’t expect the police officer to point out where you should have installed CCTV. If you get mugged, you don’t expect to be asked for proof of how you put up a fight. And if you fall victim to a sophisticated and intricate scam, you don’t expect your bank to add to your feelings of guilt and distress by pinning the blame on you.
Yet that is exactly what is happening at the moment, with victims of authorised push payment scams (otherwise known as bank transfer scams) when they are tricked into unwittingly transferring money to a scammer.
We receive information from hundreds and thousands of victims every year. The case studies we see highlight the impact on victims of this horrific crime – and how this is often exacerbated by banks who appear not to care about what has happened to one of their own customers who may have just lost a life-changing sum of money.
Blaming the victims
Recent evidence published by the Lending Standards Board (LSB) and the Financial Ombudsman (FOS) demonstrate just how poorly some banks are treating victims and the lengths they will go to to try and pin the blame on individuals rather than accept any wrongdoing on their part.
The LSB oversees a voluntary code that industry helped to write and which sets out protections for APP scam victims. The Code states that victims should be reimbursed other than in a few specific circumstances – and even then banks are expected to consider the scam in the round and how individuals may have been affected by the context of what happened and how.
Data showing just how well banks are adhering to the letter and spirit of the Code was recently provided to the LSB by signatories to the Code (which includes all the major banks plus Co-op, Metro, and Starling) and published earlier this year.
It paints a damning picture of how banks are interpreting and implementing the Code in wildly inconsistent ways and how victims are being mistreated across the board:
🔹 Victims were held fully or partially to blame 60% of the time, and therefore often denied any reimbursement
🔹 Blame was shared between the customer and either the bank sending or receiving the money, or between the two banks themselves, in a further 17% of cases
🔹 Two banks pinned the blame on victims in nine out of every ten instances
🔹 For investment scams – which often involve the highest amounts of losses – victims were blamed 67% of the time
🔹 Romance scams, which can involve extreme emotional and psychological manipulation, had a blame rate of 61%
When a victim is dissatisfied with the outcome of a decision made by their bank they can escalate it to the Financial Ombudsman for a final adjudication. In some cases, these decisions are published.
We had a look at some recent decisions, which were all upheld in favour of the victim (as are the vast majority of APP cases), and found evidence of banks placing extreme and unjustifiable expectations on what a customer should have done to avoid being scammed.
These included HSBC telling a victim who lost £2,000 to a HMRC scam that it was “inconceivable” that he didn’t spot the red flags because he worked in a professional industry, and Nationwide refusing reimbursement of £1,146 because the victim “didn’t listen” to warnings given – despite receiving a call from a spoofed number which made her believe she was speaking to her building society.
In a separate case, Halifax only returned half of a £60,000 loss to an investment scam victim who had “failed to make sufficient checks” before investing – before backtracking after Which? intervened to point out they had never asked the victim what checks they had actually made.
All of these and more provide further evidence for what we have been saying for years: the banks are consistently misinterpreting the Code they helped to write in order to put the blame on the victim, and the Payment Systems Regulator (PSR) is doing little to ensure they adhere to the rules.
Our calls on the PSR
We are calling on the PSR to use its upcoming consultation to introduce new transparency requirements on banks so that customers can see exactly how they treat and reimburse victims of APP scams. It must do this as quickly as possible to prevent banks making this a race to the bottom, and many more victims being denied rightful reimbursement
That same consultation will also recommend a way to make APP scam protections mandatory. We strongly believe that industry has been given sufficient time and opportunity to provide the solutions so under no circumstances must the banks be allowed to write another new code to replace the existing voluntary one as the PSR has suggested.
We will be continuing to make this case over the coming months so that the PSR stands firm and takes action to protect victims.
What would you say to the PSR if it suggested allowing the banks to write another new code?