Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the different rates of compensation offered by UK banks to their customers where cyber fraud has occurred.

The government has not made an assessment of different rates of compensation offered by banks.

The Payment Services Regulations 2017 require banks to give a full refund to a customer who did not authorise a transaction on their account. However, if the unauthorised transaction arose from the use of a lost, stolen or misappropriated payment instrument, before the customer notified the bank of the loss, theft or misappropriation, the bank may require that the customer cover up to £35 of the liability.

In addition, customers may be liable for unauthorised transactions if they have themselves been involved in the fraudulent activity or have intentionally not complied with their obligations in relation to the payment instrument (or have been grossly negligent about those obligations), for example obligations to keep a payment instrument safe and to notify the issuer when becoming aware that a payment instrument has been lost or misappropriated.

The Payment Services Regulations do not require banks to compensate customers where a payment was validly authorised by the customer and correctly executed in accordance with the customer’s instructions. In some such cases banks may choose to compensate customers, and this can vary between institutions.

Treasury ministers and officials have meetings with a wide variety of organisations in the public and private sectors as part of the process of policy development and delivery. This includes regular meetings with consumer organisations to discuss relevant regulatory issues, including compensation for victims of fraud.

Details of ministerial and permanent secretary meetings with external organisations are published on GOV.UK on a quarterly basis.