Banks: Fraud Prevention

Lord Davies of Oldham Excerpts

Monday 20th May 2019 Lords Chamber

[Lord Young of Cookham]

The voluntary code that comes into effect next week will in fact extend to all banks the facility to which the noble Baroness just referred, which has been undertaken by the TSB. As from next week, as long as you have done everything that you should and it was not your fault, you will get your money back. Vulnerable victims will get their money back even if they have not exercised due care. I welcome this not just because it gives added protection to customers, but because it means that the banks will have to pick up the bill, which will add to their incentive to reduce, so far as possible, incidents of fraud.

The noble Baroness then referred to confirmation of payee. She is quite right: at the moment, an electronic payment is processed on the basis of the sort code and the account number. As from later this year, banks will have confirmation of payee—in other words, they will check the name. That means that it will be difficult for fraudsters to intercept funds designed, for example, for solicitors on conveyancing, and misdirect them.

[Lord Davies of Oldham (Lab)]

My Lords, the country is well aware of the extent to which scams and frauds have been successful in recent years, and it is an acute problem. I accept that the Government and the banks have made some progress with the voluntary code, but will the Minister undertake that, if that does not provide satisfactory protection for our people, the Government will legislate to ensure that victims get repaid?

[Lord Young of Cookham]

It is exactly because the Government were not satisfied with the progress being made that the former Home Secretary asked HMRC to inspect the police response to fraud. It responded on 2 April with 16 recommendations that the Government, together with banks and the police, are in the process of implementing. There is a range of recommendations, including a more co-ordinated national response and more support for the customer. Action Fraud is also introducing a more responsive service so that, if you report a fraud, you will get feedback from the banks; that was not necessarily the case before. I am not sure whether we need more legislation; we need to see how the initiatives I referred to work through.