The move – a first in the UK banking industry – will put customers at the heart of a new strategy to tackle the fast-growing problem of bank fraud in the digital age.
In last April’s online IT banking fiasco, thousands of customers locked out of their TSB accounts were then exploited by scammers, underlining the growing sophistication of today’s fraudsters.
The bank is likely to commit to protecting against all types of transactional fraud losses – up to a cap of £1m – including cases where TSB customers have been genuinely tricked into authorising payments to fraudsters.
In general, consumers are entitled to a refund when a fraudster siphons off money from their account without their knowledge. However, the TSB executive chairman, Richard Meddings, said the bank was keen to clarify the “grey area” when individuals unwittingly authorised payments to fraudsters and were then unable – or had to fight – to get their money back.
“Our own experience last year gave us an in-depth insight in the nature of these frauds,” Meddings said. “But above all we felt that offering a guaranteed refund – and accepting that customers may have made an honest mistake – was the right thing to do. In some cases people have been losing life-changing sums of money.”
According to the trade body UK Finance, more than £1.2bn was stolen by criminals committing bank fraud last year. Of that, £354m was lost through bank transfer scams in which victims were tricked into transferring money directly from their account to a fraudster – a so-called authorised push payment (APP) fraud. The most prevalent type are purchase scams, whereby victims pay in advance for a product or service, such as a car or a holiday rental, which was not received or did not exist.
A voluntary code of conduct for banks comes into force at the end of May and will guarantee refunds for “innocent” victims, although TSB’s new guarantee is likely to go further than this.
Separately, TSB is under fire from customers for breaking a pledge not to end a favourable deal offered to account holders in the wake of its IT fiasco last year.
Only 348 days after raising the interest rate on its Classic Plus current account from 3% to 5% – and promising the deal would not be ditched after a year – TSB said it will revert to 3%.
A TSB spokesperson said customers will have benefited from the higher rate for 14 months and added: “Last May we changed the interest rate on our Classic Plus account from 3% to 5%. We have now reviewed our rates and taken the decision that from 2 July we will change the rate back to 3%. This remains the best ongoing current account interest rate in the market. We are in the process of writing to our customers to advise them of the proposed changes.”
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