With authorised push payment (APP) fraud increasing, the FCA has urged banks to enhance their anti-crime measures and improve the support they provide to fraud victims.
The regulator’s warning follows a review of fraud controls and complaint handling among financial firms. While some good practices were identified, there was disappointment regarding the support offered to customers who experienced fraud.
In the first half of 2023, over 116,000 individuals reported being victims of APP fraud, in which they were deceived into transferring money to fraudsters posing as legitimate payees. According to UK Finance’s latest fraud report, more than £152 million was reimbursed by banks to victims during this period.
However, a report from the Payment Systems Regulator highlighted significant inconsistencies in how different banks treat fraud victims, with newer entrants like Monzo and Starling receiving particularly low scores in this regard.
The FCA emphasized that banks often fail to adequately consider customer vulnerability when handling fraud claims and complaints. Victims reportedly received decision letters that were unclear, bewildering, or included unhelpful, and at times accusatory, language.
In response, the FCA is encouraging banks to enhance their anti-fraud systems and reassess their complaint-handling procedures to achieve better results for customers. “We are already collaborating with firms in our review to strengthen their approach,” the FCA stated. “We expect all payment service providers to leverage our findings to enhance their capabilities in detecting, managing, and mitigating fraud and its associated losses. Moreover, the treatment of customers, including the resolution of complaints, needs improvement to ensure consistently favorable consumer outcomes in alignment with the Consumer Duty.”