Banks: Authorised Push Payment Fraud

Lord Young of Cookham Excerpts

Thursday 11th June 2020 Lords Chamber

[Baroness Penn]

I am sure that once the confirmation-of-payee scheme has been rolled out across the six largest banks, the regulator will look at how that has worked and any further measures that need to be taken. One of the benefits of the code that is in place is that it ensures that, where victims have done everything that should be expected of them, they receive reimbursement and compensation from the bank.

[Lord Young of Cookham (Con) [V]]

My Lords, this crime is so prevalent because of the ease with which fraudsters can open bank accounts with false details. Does my noble friend agree that responsibility for paying compensation should rest not with the innocent customer’s bank, as at the moment, but with the bank that allowed the fraudulent account to be opened and the money to be stolen?

[Baroness Penn]

My noble friend is right that it is essential that banks take proper steps to ensure that bank accounts are not opened fraudulently. The Financial Conduct Authority requires banks to maintain effective systems and controls to prevent the risk that they may be used to further financial crime. However, the code that specifies who pays compensation was drawn up with both industry and consumer groups and is getting reimbursements and compensation to those innocent victims. We should support a model that is supported by industry and consumer groups.