New banking rules: fraud victims face potential £100 excess charge

As of today (7 October 2024), banks in the UK are implementing new rules to protect customers against fraud.

Under the new code, banks will have to reimburse most people who are scammed, up to a limit of £85,000.

But banks will also have the option to add a £100 excess charge to this repayment. This means that the money you're reimbursed could be reduced by £100, depending on your bank's policy.

It’s an optional charge, and not all banks may choose to implement it. The excess also can’t be applied to vulnerable consumers.

Reimbursement process and limitations

Under the new rules, banks will be required to reimburse fraud victims unless they have been grossly negligent, or the customer is considered vulnerable.

In most cases, you should receive your reimbursement within five business days of making a claim.

But if banks need more time to investigate, the process can take up to 35 business days.

The Payment Systems Regulator (PSR), which is overseeing the new fraud rules, says that the £85,000 limit will cover more than 99% of claims.

If more than £85,000 is lost and not reimbursed, fraud victims have the option to lodge a claim with the Financial Ombudsman Service (FOS), which has a compensation limit of £430,000.

Rise in authorised push payment scams

The new rules come amid a surge in authorised push payment (APP) scams, where victims unwittingly send money to a scammer posing as someone they know.

According to UK Finance data, the total number of APP cases increased by 12% to 232,429 in 2023, resulting in total losses of £459.7m.

As part of these changes, banks now also have three extra days to delay payments they think could be suspicious.  

Protecting yourself from fraud

There are steps you can take to protect yourself from falling prey to scams. Some tips to keep in mind:

• Never share your personal or financial information with unsolicited contacts.
• Verify the identity of any person or organisation requesting money or sensitive data.
• Be cautious of offers that seem too good to be true.
• Regularly check your bank statements for suspicious activity.