Major change to bank rules TODAY for millions of customers including new £100 fee and how to avoid it

NEW rules requiring banks to reimburse people tricked into transferring money to a fraudster have come into force today.

Under the shake-up, banks must reimburse authorised push payment (APP) fraud victims unless the customer has been “grossly negligent”.

Customers were initially set to receive reimbursements of up to £415,000.

However, the new rules have now implemented a cap of £85,000.

Banks can exceed this limit and repay higher amounts if they choose.

But, they also have the power to impose a £100 excess fee when settling claims, a policy that five banks have now adopted.

So, if your claim is for a payment of £100 or less, trying to recover the money may not be of any benefit.

Only four firms have pledged not to apply this charge: Nationwide, Virgin Money, TSB, and AIB.

Five banks – HSBC, First Direct, Lloyds, Halifax and Bank of Scotland – have said they will not cover fraud claims below £100.

The rest say that they “may” cover them or will judge each claim on a case-by-case basis.

Starling Bank says it may apply an excess of £50 rather than £100.

The only way to avoid this caveat is to switch to one of the four banks which have pledged not to apply these charges.

The £100 excess cannot be applied to vulnerable consumers under the Payment Systems Regulator’s (PSR) rules.

Liz Edwards, money expert at Finder, said: “Victim’s protection has been squeezed at both ends. When the upper refund limit was cut to just £85,000, many in the industry, including the PSR, justified this by saying it would still cover over 99% of claims.

“But because so many banks are now saying they won’t cover – or may not cover – the first £100, that 99% must surely be lower.

“Based on 2023 fraud figures, more than 58,000 cases would have resulted in no refund if all companies had applied the excess, and now only four of the major providers have confirmed they won’t.

“£100 is a lot of money to many people. It doesn’t help that 12 banks said they might apply it – customers don’t know where they stand.”

The new protections apply from October 7 and only when a transfer is made to and from a UK bank account.

Previously, many bank customers have relied on a voluntary code to get their money back.

Concerns were raised that consumers faced a refund “lottery”.

Fraud is broadly split into authorised and unauthorised.

Authorised fraud occurs when individuals are deceived into willingly handing over money or consenting to fraudulent payments.

Unauthorised fraud involves criminals stealing financial information to obtain products or services in the victims’ names.

A fraud explosion in recent years has seen criminals pose as trusted institutions such as banks, companies, or government departments to persuade people to part with their cash, and scams are becoming increasingly sophisticated.

According to figures from UK Finance, the total number of APP cases jumped by 12% annually last year to 232,429. Reported losses to this type of scam totalled £459.7 million.

Purchase scams accounted for around two-thirds (67%) of the total number of APP cases in 2023.

With a purchase scam, someone pays in advance for goods or services that are never received, often ordered online, such as through an auction website or social media.

PROTECT YOURSELF FROM SCAMMERS

More than three-quarters of authorised fraud starts online.

When handing over cash for goods or services found online that you haven’t yet received, you should be extra vigilant against scams. 

Fraudsters often use popular events, such as the recently announced Oasis concerts, to prey on victims.   

Buy from reputable sources and sites to protect yourself.

Alarm bells should be ringing if prices are too good to be true.

Take the time to carry out extra checks on unknown sources. 

Fraud cases originating through phone calls make up fewer cases, but losses are often far larger.

These are typically when criminals impersonate banks or other trusted sources.  

It’s ok to reject, refuse or ignore requests for cash.

Usually, criminals will try to pressure or rush you into payments.

If you doubt a caller’s identity, call a trusted company or organisation phone number to check.