Barclays, NatWest, Nationwide and Santander customers could see payments delayed by 3 days under new clampdown
The move comes as part of efforts to combat the estimated £460 million lost to fraud in the last year
PA
Bank customers in the UK could soon see their payments delayed by up to three days as part of a new government crackdown on fraud.
The Treasury has proposed new laws that would allow banks to pause suspicious transactions for up to 72 hours if there are reasonable grounds to suspect fraudulent activity.
This marks a significant change from the current system, where banks must either process or refuse a payment by the end of the next business day.
The move comes as part of efforts to combat the estimated £460million lost to fraud in the last year, which accounts for over a third of all reported crime in England and Wales.
The proposed legislation aims to give UK banks such as Barclays, Santander, Lloyds and NatWest more time to investigate potentially fraudulent transactions and protect vulnerable customers from scams.
The move comes as part of efforts to combat the estimated £460 million lost to fraud in the last yearPA The new rules target various types of fraud, including authorised push payment (APP) fraud, where victims are tricked into sending money to fraudsters' accounts. This scam has become increasingly common, along with purchase and romance scams.
Purchase scams involve paying for goods or services that never arrive or are fake, while romance scams prey on vulnerable individuals by feigning romantic interest to extract large sums of money.
Ben Donaldson, managing director of economic crime at UK Finance, said the additional time would allow payment service providers to contact at-risk customers, potentially "limiting the psychological harms that these awful crimes can cause and stop money getting into the hands of criminals".
The banking industry's trade body supports this move, which follows recent discussions about the maximum refund amount for victims of APP fraud.
Under the proposed rules, banks would be required to inform customers about any payment delays and explain the steps needed to unblock the transaction if fraudulent activity is suspected.
Financial institutions would also be obligated to compensate customers for any interest or late payment fees incurred as a result of these delays.
Economic Secretary to the Treasury, Tulip Siddiq, emphasised the importance of these measures, and said: "We need to protect these people better, which is why we are giving banks more time to investigate suspicious payments and break the criminal spell that scammers weave."
While the extended investigation period could potentially affect some payments, it is designed to target high-risk transactions specifically.
Consumer groups have cautiously welcomed the proposed changes.
Rocio Concha, director of policy and advocacy at Which?, said the proposals mark "a positive step in the fight against fraud".
She added: "While it should not affect the vast majority of everyday payments, it's important that banks can delay a bank transfer and take action if they think a customer is being targeted by a scam."
LATEST DEVELOPMENTS:
However, Concha emphasised that "these measures should be used in a careful and targeted way".
The new rules aim to provide a balance between protecting consumers and maintaining efficient payment systems.
While some customers may experience delays, the Government argues that the benefits of increased fraud prevention outweigh potential inconveniences.
The proposed legislation is part of a broader effort to combat financial crime in the UK, as fraud continues to evolve and target vulnerable individuals and communities.
You may like
