01 November 2023 , 13:36
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The best and worst banks for repaying money lost to fraud and scams have been revealed.
The Payment Systems Regulator (PSR) has for the first time released data from 14 of the UK's major banking groups on how much it reimburses customers when they fall victim to an Authorised Push Payment (APP) scam. APP scams happen when someone is tricked into sending money to a fraudster posing as a genuine payee. This type of scam has quickly become one of the most "significant" types of fraud accounting for nearly £500million in losses last year.
According to the PSR, TSB was found to have fully reimbursed the most victims in full - based on the volume of cases - with 94% of reported APP scam cases reimbursed. This was followed by Nationwide which fully reimbursed 91% of cases and then Barclays which fully reimbursed 79% of cases. For partial repayments, TSB and Nationwide's reimbursement figure sat at 4%, and Barclays sat at 13%.
On the other side of the spectrum, Monzo only fully reimbursed 6% of cases, whilst Danske Bank fully reimbursed 7%, and AIB fully reimbursed 12%. The Co-operative Bank was the only bank to have a higher figure for partial reimbursements compared to full sitting at 40% to 33% respectively.
The four banks found to have the highest "sending fraud rate" - so had the most instances of customers sending cash to scammers were TSB, Santander, Metro, and Monzo. For every £1million TSB customers sent in 2022, £348 of that was lost to APP fraud. For Santander, the figure stood at £322, and for Metro and Monzo £280 was lost.
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The four banks who have the highest "receiving fraud rate" - so had the instances of accounts receiving fraudulent cash were Metro Bank, Starling, TSB and Monzo. For every £1million received into Metro Bank accounts in 2022, £696 of it was APP fraud. For TSB, the figure was £605, for Starling, it was £307 and for Monzo, it was £227.
The PSR says this report shows the performance of banking groups in 2022 - before any regulatory requirements will come into effect.
Under the new rules from the PSR set to be introduced next year, banks and building societies will need to reimburse the victim for the amount lost to this type of scam within five business days. Currently, banks and building societies do not need to do this. However, many have signed up for a voluntary agreement which requires them to consider the cases for reimbursement.
Chris Hemsley, managing director of the PSR said: “This is the first time we can see at an individual level how well banks and payment firms are dealing with APP fraud. This represents a substantial improvement in transparency. This provides better information for customers on how firms handle APP fraud and encourages these firms to take more action to tackle it.
“Our approach is working because we know there is a greater focus across many more firms on preventing fraud. Our commitment to transparency and the forthcoming mandatory rules are key to strengthening efforts to prevent these frauds from happening in the first place. Over the coming months, we will be bringing all payment firms into new reimbursement arrangements to give more consistent protection across the board. This is important because we can see from today’s report that this has not always been the case.”
Commenting on the findings, UK Finance said: "What today’s data from the PSR does not show is where fraud starts. Our data shows that 94% of authorised fraud starts online or over the phone, through social media, fake messages and more. But the technology and telecommunications sectors bear no responsibility for reimbursing victims, which means there is little commercial incentive for them to truly tackle the enormous threat that continues to proliferate on their platforms and networks.
"While you can reimburse money, you cannot reimburse the emotional and psychological impact that fraud has on victims. We need these sectors to do more with us to protect consumers by preventing these awful crimes from happening in the first place."
List of cases fully reimbursed by banks after APP scam
- TSB - 94%
- Nationwide - 91%
- Barclays - 79%
- Santander - 54%
- Lloyds, Bank of Scotland and Halifax - 69%
- HSBC and First Direct - 66%
- NatWest, RBS and Ulster Bank - 70%
- The Co-operative Bank - 33%
- Metro Bank - 59%
- Clydesdale and Virgin Money - 44%
- Starling - 44%
AIB - 12%
- Danske Bank - 7%
- Monzo - 6%