Banks: Internet Transfers of Cash

Lord Fowler Excerpts

Thursday 9th July 2020 Lords Chamber

[Lord Mackenzie of Framwellgate (Non-Afl) [V]]

My Lords, we all support security checks by banks to prevent fraud and scams. However, there seems to be evidence emerging that some banks are routinely delaying transfers by holding up payments in the name of security. It is apparent that transfers are being frozen by banks without any adequate reason being given. Complaining is then made difficult by inadequate staffing or working from home, with long queueing on the phone. False promises of jam tomorrow are made. In some cases, the delay is blamed on HMRC, which blocks the payment with some kind of flagging mechanism on the account. Even when cleared, removing the flag is woefully slow—over two or three weeks, in one example, allegedly because HMRC is inundated with work. This is not good enough. The Minister knows that cash flow is the lifeblood of business, and these blockages in companies’ financial arteries are haemorrhaging British jobs. I ask the Minister: should there not be a duty on the banks to notify card-holders immediately when transfers are delayed and put on hold like this? Could the Minister advise the House on whether the banks profit by returning possession of these funds, which must amount to significant sums at any one time?

[The Lord Speaker (Lord Fowler)]

I repeat my instruction to have short questions. It is totally unfair on other questioners.

[Baroness Penn]

My Lords, there are circumstances where a firm may not be able to process a transaction immediately—in particular, where there are suspicions of criminal activity such as fraud or money laundering. The regulations in this area require checks to be proportionate to the assessment of risk. I reassure the noble Lord that, in such cases, banks should not be profiting from the holding of payments. On the question of disclosure, as this is potentially about fraud or other criminal activity, disclosing the holding of funds for these purposes may prejudice the investigation that is taking place.

--- Later in debate ---

[Baroness Penn]

I am not aware of the adverts that the noble Baroness refers to. We expect all businesses to treat SMEs fairly and proportionately in their transactions.

[The Lord Speaker]

My Lords, all supplementary questions have been asked. We now come to the second Oral Question.