The UK Treasury has proposed new regulations allowing banks to delay payments by up to 72 hours if there are reasonable grounds to suspect fraud. This initiative aims to give banks more time to investigate suspicious transactions, potentially preventing fraud or scams before money reaches criminals.
Key Highlights of the Proposal:
- Delayed Payments: Banks can delay a payment for up to three days if fraud is suspected. They must inform the payer of the delay, the reason, and any required actions for the payment to proceed.
- Amendment to Regulations: This will amend the 2017 Payment Services Regulations, which currently require payment execution within a set time limit.
- Fraud Prevention: This follows findings that UK bank fraud losses exceeded £1 billion in 2023, with Authorised Push Payment (APP) scams playing a significant role. APP reimbursement legislation is set to come into effect on 7 October with a reimbursement limit of £85,000.
Comments from Officials:
- Tulip Siddiq, Economic Secretary to the UK Treasury, emphasized that hundreds of millions are lost to scammers each year, and the new powers will give banks more time to protect vulnerable individuals.
- Lord Sir David Hanson, Minister for Fraud, highlighted the increasing prevalence of fraud in England and Wales, citing scams like purchase scams and romance scams as significant drivers.
- Ben Donaldson, UK Finance’s managing director of economic crime, noted that the delay gives payment service providers (PSPs) time to advise and support customers before criminals can access their money.
Compensation for Customers: If a legitimate payment is delayed, banks must compensate customers for any interest or late fees incurred.
Mobile Security Focus:
- Jack Kerr, director at Appdome, pointed out that mobile banking apps are a prime target for fraud. As a large percentage of Brits use these apps daily, he advocates for real-time, automated fraud detection systems to prevent unnecessary disruptions in essential payments, such as mortgages.