The chairman of the Treasury Select Committee has written to Barclays, HSBC, Lloyds, RBS and Santander asking for more information about fraud figures after the committee heard evidence the 'banks may be understating the level of fraud in the banking system'.
Andrew Tyrie MP has asked the big banking chiefs to clarify the figures relating to online banking fraud after an evidence session last month was told that the figures do not include money which has been taken fraudulently but subsequently recovered. (See our Stop scams guide).
Asked during the session why banks would be "systematically understating the scale of fraud in the banking system", Dr Richard Clayton, a senior researcher in security economics at the University of Cambridge, responded: "Because they do not want to frighten people."
Clayton told the committee that the banks are also failing to report full statistics on how much money is actually at risk of fraud – that is, the sum of all the accounts that criminals are known to have been capable of accessing fraudulently.
He said: "If your account has been accessed without your knowledge and you change your password and everything is then just fine; it is obviously a scare for the bank but it is not a problem to you and no money goes missing, so it is hard to call that fraud. It is obviously criminal but it is not fraud per se. You have not lost money."
He added that the scale of fraud could be twice the number reported by the banks, so for every £1 paid out to victims, the actual level of fraud is nearer £2. While no deadline has been set for the banks to respond to the request for further information, the Treasury adds that it expects something before Christmas.
MoneySavingExpert.com has contacted the five banks for a response and this is what we've received so far:
- Barclays says only that it has received the letter but is unable to comment further.
- HSBC says it takes fraud and other financial crimes very seriously and urges customers to protect themselves.
- RBS says it "works closely with law enforcement and industry partners to share intelligence and data to combat and prevent fraud." It adds that customers should create strong passwords, and reminds people that it will never ask for a PIN or password – see the RBS security page for more information.
- Santander says that it has received the letter and is in the process of drafting a reply so can't comment further.
We're still awaiting a response from Lloyds and will add this into the story once we hear back.
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Tyrie says: "The Committee was told last month that the amount of fraud reported by banks may substantially understate the true scale of the problem. It would be extremely concerning were this to be the case.
"Any data on fraud levels published by the industry should be as comprehensive as possible.
"The public should be given the best possible information about the risk of fraud, as well as how to avoid it. Banks must be as open as possible with consumers about what this information does and does not cover.
"Banks are perhaps understandably reticent about disclosing information that could be used by fraudsters. But the public and consumer interest in a high level of transparency is also strong. It is possible that consumers would be even more risk averse with respect to fraud were it the case, as Dr Clayton suggests, that a lot more money is being withdrawn from accounts than consumers realise. The incentives on banks to clamp down on fraud need to be at least as strong as those on consumers to identify it."