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UK Banks Pause Suspicious Payments
The UK government has introduced new legislation allowing banks to hold suspicious payments for up to three days. This extended period aims to combat the significant losses from fraud, which reached £460 million last year. The current requirement for payments to be processed or rejected by the end of the next business day has been relaxed to facilitate more thorough investigations.
Economic Secretary to the Treasury, Tulip Siddiq, emphasized the importance of the new law, stating,
“Hundreds of millions of pounds are lost to scammers each year, targeting vulnerable communities and ruining the lives of ordinary people. 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.”
Concerns Raised Over Potential Impact on Everyday Banking
While the initiative primarily aims to protect consumers, it raises concerns about its impact on everyday banking, particularly for essential transactions like mortgage payments. Jack Kerr, director of Appdome, highlighted the potential drawbacks of delayed transactions,
“This approach can severely disrupt the user experience, especially when it impacts essential payments like mortgages.”
He advocates for the implementation of automated fraud detection systems to identify threats proactively, reducing the need for such measures.
Kerr further noted the increasing reliance on mobile banking apps, urging a focus on app security.
“According to YouGov data, 33% of Brits use their mobile banking app daily, which makes them a prime target for fraud,” he remarked.
Appdome’s survey underscores the high consumer expectations for security, with nearly all respondents expecting robust fraud protection within apps.
Calls for Deeper Reforms to Address Fraud at Its Root
Additionally, Mark Munson, MD of payments at Moneyhub, critiqued the new measures as superficial, advocating for deeper reforms to address fraud at its root. “The recent decision to grant banks the power to delay payments for up to four days reveals a critical flaw; banks are focused on slowing down payments rather than cutting off fraud at its source,” Munson explained. He called for stricter KYC controls and cooperation across sectors to prevent fraudsters from exploiting financial systems.
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