The Payments Systems Regulator (PSR) has made it mandatory for banks to cover consumers’ losses from authorised push payment (APP) fraud up to £85,000, as long as they haven’t been “grossly negligent”. However, financial comparison site, Finder, has revealed that only four out of 21 major banks have decided to definitely cover the first £100 of any APP case.
APP fraud is when a fraudster tricks you into sending money from your account to an account that they control, for example by selling items online that don’t exist or pretending to be from your bank. Finder has contacted all major banks in the UK and looked through their updated website information or terms and conditions, finding only four have committed to covering the first £100. These are Nationwide Building Society, Virgin Money, TSB and AIB.
This is significant as previous figures from the PSR revealed that around a quarter of all APP fraud cases were for under £100. And a figure from TSB for January to June 2024 put this as high as a third.
Currently, HSBC, first direct, Lloyds, Halifax and Bank of Scotland have said they will not cover fraud claims below £100. The other banks said they ‘may’ cover them or will judge each claim on a case-by-case basis. Starling Bank says it may apply an excess of £50 rather than £100.
Banks have to fully refund any customer classed as vulnerable. Initially the PSR said the upper limit for refunds would be £415,00 but it then reduced this by 80 per cent to £85,000 after lobbying from banks and payments companies.
In 2023, fraudsters stole nearly £1.2billion in the UK. Victims of APP fraud lost £459.7million, and got back 62 per cent of that amount. The rules are likely to boost the total amount refunded, but it’s likely there will be tens of thousands of victims who lose less than £100 and get nothing back because of the banks’ new policies.
Further cutting down who’s covered
Liz Edwards, editor-in-chief at finder.com
Commenting on the research, Liz Edwards, money expert at Finder said:“Our research reveals the refund lottery that fraud victims are now facing.
“Victims’ protection has been squeezed at both ends. When the upper refund limit was cut to just £85,000, many in the industry, including the PSR, justified this by saying it would still cover over 99 per cent of claims. But because so many banks are now saying they won’t cover – or may not cover – the first £100, that 99 per cent must surely be lower.
“Based on 2023 fraud figures, more than 58,000 cases would have resulted in no refund if all companies had applied the excess, and now only four of the major providers have confirmed they won’t. £100 is a lot of money to many people. It doesn’t help that 12 banks said they might apply it – customers don’t know where they stand.”
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