The Financial Ombudsman Service, which manages disputes between financial firms and customers, is ruling against banks in 73% of authorised fraud cases, data exclusively obtained by Which? demonstrates. This means if you have been tricked into sending money to a scammer, you may be able to get a refund from your bank. The biggest banks are signed up to the voluntary Contingent Reimbursement Model (CRM) Code, which is designed so victims of authorised push payment fraud (APP) are treated fairly and consistently when they ask for compensation. If your bank refuses compensation, you can escalate your case to the Financial Ombudsman Service (FOS). But the number of customer complaints about banks’ handling of authorised fraud – the vast majority of which are APP – landing at the FOS more than doubled in the 2020-21 financial year, from 3,600 to 7,770. And three-quarters (73%) of these were upheld in favour of the customer. APP fraud – being tricked into transferring money to a fraudster – is fast becoming one of the UK’s biggest frauds. Losses hit £355.3m between January and July, outstripping losses to card fraud. Banks are required to refund you for losses to unauthorised fraud such as card fraud, but not APP fraud. The voluntary CRM code was launched in May 2019 and requires signatory banks to provide effective warnings to customers, identifying vulnerable customers and acting quickly when a scam is reported. In return, you are expected to pay attention to take care, have a reasonable basis for believing the payment is genuine, and pay attention to warnings. Crucially, signatory banks must reimburse customers even if both parties have done nothing wrong. Data shows that many victims have been wrongly denied compensation but haven’t approached the FOS. Escalating a complaint to the FOS is free, and can be done online, but not all victims will be aware of or able to use the service. That’s why Which? wants the government to swiftly take the necessary action to enable the Payment Systems Regulator (PSR) to introduce mandatory APP fraud reimbursement for all firms using Faster Payments.
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