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Funding for scheme to help bank transfer scam victims extended to March

Funding for scheme to help bank transfer scam victims extended to March

A temporary funding arrangement for a scheme that reimburses people who are tricked into transferring money directly to a fraudster will be extended until the end of March – meaning more victims get their money back.

In May, UK banks agreed to a voluntary code which states that victims of authorised push payment (APP) scams should be reimbursed unless they ignored their bank's warnings about the scam or were "grossly negligent" in transferring the money.

However, earlier this month it emerged that there was "no industry consensus" on how to fund a central kitty to reimburse victims in scenarios where both the bank and customer were not to blame. But now UK Finance, a trade association that represents banks, has said it anticipates that a temporary funding arrangement – originally due to expire at the end of this year – will last until 31 March 2020.

While this is good news for consumers, it's still not clear what will happen after this date, with UK Finance saying the arrangement will be "reviewed".

For full information on the code, see our MSE News story Victim of a money transfer scam? You now have new rights with most banks from earlier this year.

How does funding for the scheme work at the moment?

The voluntary code commits banks that are signed up to it to a series of measures to tackle APP fraud, such as educating customers about scammers and how they work. It also says banks must try to identify customers who are at higher risk of becoming a victim, warn customers when they've spotted a scam and try to delay payments while investigating potential scams.

It's worth noting the code only applies to transfers between UK accounts. Overseas accounts aren't covered.

This is the way refunds work:

  • If the bank's to blame, it'll give a full refund. Where a bank fails to meet the code's standards, it'll fully reimburse the customer, providing they did everything expected of them.

  • If neither bank nor customer is to blame, the customer will still get a full refund. This won't come direct from the bank though. Where the customer and banks involved in a transaction have met their expected level of care, the customer will be reimbursed from a collective pot funded by the banks – this is the area where the interim funding comes into play.

  • Where there's shared blame, the customer will get a partial refund. The amount depends on who's to blame out of those involved. For example, if you and the banks receiving and sending the money all fail to meet the standards expected, you'll get a third of the money you lost from each bank, but have to swallow the remaining third of the loss yourself.

  • If customers are to blame, they won't get a refund. If customers are found to be "grossly negligent", they won't get any money back.

What does UK Finance say?

UK Finance chief executive Stephen Jones said: "This voluntary agreement to continue the interim funding arrangements by seven of the code signatories [which protects customers of all the banks signed up to the code] into March next year therefore provides important time for further proposals to be considered and implemented."