Q&A: Banks MUST now refund some scam victims – what the new rules mean for you

Bank transfer scams – also known as "authorised push payment (APP)" fraud – cost individuals and businesses at least £213.7 million in the first half of 2024, according to the latest figures from industry trade body UK Finance. Yet only 59% of this (£126.7 million) was returned to victims – something the new rules are aiming to change.

What are bank transfer scams?

It's where you get tricked into sending money from your account to a fraudster's. Common examples include:

• Purchase scams – where you're tricked into paying for goods that don't exist.

• Romance scams – where you're duped into thinking you're in a relationship with a swindler.

• Impersonation scams – where fraudsters pretend to be from your bank or the police and pressure you into transferring money to a "safe account".

• Investment scams – where scammers clone the websites of legitimate firms, or entice you to put money into fake schemes.

• Spoofing scams – where the scammers intercept and hijack your communications with someone else (for example, a family member or solicitors' firm).

These scams are often incredibly sophisticated and very convincing. See our 30+ ways to stop scams guide for help spotting them and tips to help you avoid them.

What payment types do the new rules cover?

The new rules only cover scams where you've sent the money by UK bank transfer, either by Faster Payments or CHAPS. Other payment types, including card, cash and cheque AREN'T covered.

When do the rules take force?

The rules apply to payments made on or after Monday 7 October 2024. Any payments made before this date AREN'T covered, and so fall under the old voluntary code of practice.

Are all banks covered?

Yes – and not just banks. Building societies, e-money firms (such as prepaid card providers) and savings providers are all included, too.

Is there a limit on how much I can claim back?

Yes – £85,000. However, individual payment providers can choose to reimburse more than that.

The Payment Systems Regulator (PSR), the body behind the new rules, says the £85,000 limit will cover 99.8% of all APP scam cases, and lead to reimbursement of around 90% of the total value of APP scams.

The limit had initially been set at £415,000, but was later lowered amid pressure from the financial services industry. The PSR said it found that a higher limit could reduce investment and risked stifling competition and innovation in the market.

If you've lost more than £85,000, and you think the firm was at fault, you can still complain to the Financial Ombudsman Service, which has a higher £430,000 limit.

I think I've sent money to a scammer – how do I make a claim?

First, end all communication with the scammer immediately. If you're on the phone, hang up.

Then, call your bank or payment provider directly and let it know what's happened.

Make sure you find your bank's contact details independently – for example, call the phone number on the back of your card or on your bank statement. Alternatively, for speed and ease, you can dial 159 instead – this will connect you directly with your bank.

How long will it take to get my money back?

In most cases, you can expect a refund within five working days of making a claim.

However, depending on the complexity of the case, if your bank needs extra time to gather additional evidence from you, or make enquiries with the bank on the other end, it will have up to 35 working days instead.

Could the bank reject my claim?

Yes – but only if you were "grossly negligent" in making the payment.

Banks can only reject claims if they can show that you acted with a "significant degree of carelessness". According to the regulator, this is a "very high bar" and should only affect a "small minority of cases".

However, you'll still need to take care when making payments. In particular, you'll need to:

• Pay attention to any warnings your bank gives you;

• Let your bank know as soon as possible if you suspect you've been scammed;

• Share information with your bank to help it assess your claim; and

• Consent to fraud details being reported to the police.

If you don't, and your bank decides you were negligent, it won't be required to refund you. However, these requirements don't apply if you're vulnerable.

I've read about a £100 excess – what's that about?

Under the rules, firms have the option to charge an excess of up to £100 on each claim. This means they can choose to withhold up to the first £100 lost (except if you're vulnerable, which includes where the excess would cause you financial difficulty).

We asked all the major banks whether they would charge an excess. Here's what they told us:

• WON'T charge any excess: Nationwide, TSB and Virgin Money.

• MAY charge £100 excess: Bank of Scotland, Barclays, Chase, Co-op Bank, First Direct, Halifax, HSBC, Lloyds, Metro, Monzo, NatWest, RBS and Santander.
  
  These banks said they would charge a £100 excess in some circumstances, but wouldn't provide specific examples. Instead, they'll assess claims on a case-by-case basis.

• MAY charge £50 excess: Starling. Again, it'll decide case-by-case.

It's worth noting that in our responses to the regulator's consultations on these new rules, MoneySavingExpert.com and other consumer organisations argued strongly against the introduction of a fixed excess amount.

For many, £100 is not a trivial amount to lose, and our concern about having this limit in place is that it could lead to scammers evolving their tactics to defraud people via smaller individual payments of less than £100 in the hope that victims won't report it as they won't get it back.

However, in its final decision, the regulator stated that the excess "will encourage customers to remain vigilant when making a payment and therefore mitigate the risk of moral hazard" (whereby people are less cautious because they know they're going to be reimbursed).

What are the extra protections for vulnerable people?

If you're vulnerable, you WON'T be charged an excess on your claim and you won't be expected to meet the same standards of carefulness as those who aren't vulnerable.

A vulnerable person is defined as "someone who, due to their personal circumstances, is especially susceptible to harm – particularly when a firm is not acting with appropriate levels of care". Banks will have to assess this on a case-by-case basis, taking into account all the facts around any claim.

What if the bank unfairly rejects my claim?

You can raise a formal complaint. If that doesn't resolve the issue, you can then escalate it to the free, independent Financial Ombudsman Service.

What else is being done to tackle bank transfer scams?

By the end of this month, nearly all payment firms in the UK will finally be part of the 'Confirmation of Payee' scheme, which lets you know if the name of the person you think you're sending money to doesn't match the actual name on the account.

The biggest banks have been required to have this system in place since 2020, but smaller firms were given more time to implement it.

Separately, the Government also announced last week that banks will be given the power to delay payments by an extra 72 hours where they reasonably suspect a payment is fraudulent.