Banks must treat victims of scams more fairly, says UK complaints body

Number of people asking ombudsman for help rose by 66% between April to end of June

Banks need to do more to treat people fairly when they are the victim of scams, according to the UK financial sector’s official complaints body, which is finding in the customer’s favour in three-quarters of such cases.

The Financial Ombudsman Service said the number of people asking it for help with fraud and scam problems was up 66% in the period 1 April to 30 June, compared with the same three months in 2020.

Over that period 60% of fraud and scam complaints were upheld in favour of the consumer, compared with 50% the previous year.

However, when it came to complaints about banks and other firms refusing to refund money that people had lost through scams such as authorised push payment fraud – which often involves email accounts being hacked – the ombudsman upheld three-quarters in customers’ favour.

A spokesperson said these figures “suggest that banks and other financial institutions still need to do more to resolve complaints from their customers fairly before people are forced to seek help from the Financial Ombudsman Service”.

On Wednesday, the banking body UK Finance said fraud posed a national security threat, with £754m stolen from bank customers during the first half of this year as scammers capitalised on the coronavirus pandemic.

Cases looked at by the ombudsman included fraudsters posing as a customer’s bank and convincing them to move their money to a fake “safe account”, and shoppers paying for goods that never arrive.

Nausicaa Delfas, the service’s interim chief executive and chief ombudsman, said: “It’s a real concern that we are seeing such an increase in scams. It’s vital that people take extra care with their finances, as unfortunately fraudsters are becoming increasingly sophisticated.”

The data also revealed there had been an increase in complaints about cryptocurrencies during the pandemic, which appeared to have been driven in part by scam investments advertised on social media.

While cryptocurrencies are unregulated investments, and are therefore for the most part are outside the ombudsman’s remit, it can look into complaints about banks refusing to reimburse people who feel they have been a victim of a fraud or scam.

It said anecdotal evidence suggested the increase in cryptocurrency complaints could be linked to young people wanting to make extra cash while furloughed or simply spending more time online.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

Overall, the ombudsman service received 50,906 complaints about financial firms during the three-month period. Meanwhile, ombudsman data relating to firms covering January to June this year showed that the company with the most new complaints against it – 10,973 – was high-cost loans provider Provident Personal Credit, part of Provident Financial.

Separate research from Nationwide building society found that financial worries, the need for quick cash and a greater tendency to take risks made students a prime target for criminals looking for money mules, where their bank account is used to launder stolen cash.

The figures showed that nearly a third (29%) of students were prepared to risk allowing a third party to use their current account or transfer money for someone.


Rupert Jones

The GuardianTramp

Related Content

Article image
Banks act to stop transfer scams and errors
‘Confirmation of payee’ system matches account number to holder’s name, so users will know cash is going to right recipient

Patrick Collinson

29, Nov, 2016 @9:30 AM

Article image
Scam ‘epidemic’: Big tech firms must join fight, says Nationwide chief
Building society launches pre-payment hotline after bank-transfer scams rise sharply during pandemic

Hilary Osborne

27, Sep, 2021 @9:00 AM

Article image
Bank fraud victims likely to be offered fairer treatment
New voluntary code comes into play to protect scams in which victim pays fraudster directly

Miles Brignall

04, May, 2019 @10:00 AM

Article image
Which? calls for all banks to adopt anti-fraud measures
Consumer group says analysis shows £1bn lost to fraudsters since the start of 2017

Miles Brignall

17, Mar, 2020 @12:01 AM

Article image
Haunted by shame: victims of bank transfer scams tell of lasting trauma
Fraud can have devastating consequences on victims, and not only financially

Anna Tims

17, Apr, 2021 @8:00 AM

Article image
Banks' online security is failing customers, says Which?
The consumer group says five of the UK’s biggest banks and building societies consistently scored poorly in its security test, including Lloyds and Santander

Miles Brignall

20, Oct, 2016 @9:30 AM

Article image
Pension scams: some victims have lost more than £1m to fraudsters
As more over-55s are targeted, regulators say average amount swindled in 2017 was £91,000

Rupert Jones

28, Jan, 2019 @4:57 PM

Article image
Banks need to tackle web fraud
Losses from online crime are borne by customers but there are simple changes that could help protect them

Patrick Collinson

30, Jul, 2016 @6:00 AM

Article image
Why is it so hard for banks to stop the fraudsters?
Banks are accused of failing to shut accounts used by scammers – but that could soon change

Miles Brignall

14, Jul, 2018 @6:00 AM

Article image
Banks to check account names to beat transfer fraud
‘Confirmation of payee’ system will stymie increasingly sophisticated criminal scams

Rupert Jones

18, Oct, 2018 @5:47 PM