The primary function of banks is to safeguard individuals’ funds, and it’s a long-established principle that deposits should be safe. Banks are supposed to be the guardians of our money, but many customers are finding out the hard way that not enough is being done to protect that money.
When fraudsters steal from bank accounts, victims often face a long and frustrating process to get their money back.
Many banks use unclear, unhelpful, and in some cases, accusatory language while refusing to compensate victims for their losses. They claim that there is nothing that they can do to help, forcing already vulnerable people to either accept their losses or to complain to the Financial Ombudsman Service (FOS). This is not only unfair but also damaging to the trust and confidence that customers have in their banks.
CEL Solicitors has helped to recover more than £50 million in fraud losses, the majority of which were initially denied or only partially reimbursed by their bank. Acting for 10,000+ clients, the firm sees first-hand the devastating effect on people who feel they have been treated unfairly by their bank.
FCA Report Findings
The Financial Conduct Authority (FCA) has released a study that examines how banks, building societies, e-money online banks, and other entities providing payment accounts (also referred to as Payment Service Providers, or PSPs) handle fraud risks and customer treatment.
Many banks and PSPs have attempted to enhance their fraud detection and prevention measures. However, the FCA has identified that a significant number are not making sufficient efforts and are ultimately failing their clients.
In the first half of 2023 alone, almost £240 million was lost to authorised push payment (APP) scams according to UK Finance. Compared to the same period in 2022, the volume of reported cases increased by 22%.
In reality, however, both the number of incidents and the amount lost to fraud are likely to be several times higher than reported, with the National Crime Agency estimating some 86% of fraud incidents go unreported.
The report found that many of the firms reviewed did not prioritise delivering good consumer outcomes when dealing with fraud claims and complaints, instead they often prioritised their own commercial risk, rather than the treatment of the customer.
They also found significant room for improvement in the support provided to victims of fraud, especially at the first point of contact, with customers often facing difficulties and delays when simply trying to report fraud.
Worse yet, the report found that the decision letters sent to customers were sometimes unclear, confusing, used unhelpful, and, on occasion, accusatory language. Worryingly, there was also very little evidence that firms considered the vulnerabilities of their customers when making decisions about fraud claims and complaints.
The staggering rise in the cost of living has left many hardworking people to struggle just to get by. In turn, this has pushed many to look for ways of spending less by looking for online deals and discounts, playing right into the hands of fraudsters who are willing to use every tool available to steal money from unsuspecting victims. Customers in vulnerable circumstances like this are prime targets for fraudsters to exploit.
How Banks Are Failing Customers
The FCA’s report identified that while many firms had made some effort to help prevent fraud, more work was needed.
“Most firms in our review had significant scope to further build-out and strengthen their approach. We expect firms to ensure they are doing enough to consider, monitor and mitigate the risks of different fraud types occurring, from onboarding a customer and throughout their relationship with the firm.”
“We are concerned that customers cannot always report fraud easily or promptly. Firms’ websites do not always provide clear information about how a customer can contact a firm to report fraud or what action to take if the fraud occurs outside the firm’s standard operating hours.”
The FCA report found that banks had “an insufficient focus on delivering good customer outcomes”, that bank “actions often focused on commercial risk appetite, rather than customer impact and treatment”, that “firms needed to do more to enable customers to report fraud easily and promptly” and that banks had “poor complaints handling including firms often taking too long to respond to customer complaints”.
In response to the report, Paul Hampson, Chief Executive of CEL Solicitors said:
“Poor customer outcomes, poor customer impact, poor customer treatment, poor customer support, poor complaints handling, long delays, letters that are unclear and confusing, accusatory and unhelpful, and a disregard for the vulnerabilities of customers. That is quite the list!
“We can see why banks, which may not want to pay out, might prefer to maintain such a terrible position, but why should vulnerable people who have been humiliated, mistreated, fobbed off, ripped off, confused and insulted by banks not be allowed legal representation?
“Every one of the thousands of fraud clients we have helped to recover money for had at one stage been denied the support they deserved from the place they trusted to guard their money and financial interests – their bank.
“It is clear from the FCA’s report that banks and financial institutions are more concerned with protecting their own profits than protecting the wellbeing of their clients. In many cases, it appears fraud victims are either not taken seriously or brushed off by banks with little thought to the impact on their emotional and financial wellbeing.”
“Banks have cut back on staff and closed branches for years now which has seriously damaged their ability to intervene on active scams as they happen. The increase of online and app banking, increased daily payment limits, faster payments, poor education and warning have led to a proliferation of online scams as it is too easy for customers to send payments to scammers”
“We are successful in helping customers whose banks have rejected their request for a refund in getting the bank’s decisions overturned but we are also putting pressure on banks to improve their services, so we are not needed in the future.”
