Bank payments in the UK may face delays of up to three days due to new regulations aimed at providing banks with additional time to investigate possible fraud. Under the proposed laws, payment processing can be stalled for up to 72 hours, giving financial institutions more leeway to scrutinise transactions for suspicious activities and potentially prevent high-risk payments from being processed. Currently, banks are required to either approve or decline a payment by the end of the following business day. The extended timeframe is intended to empower banks to delve deeper into transactions that raise red flags and to halt any dubious payments. Tulip Siddiq, the economic secretary to the Treasury, emphasised the importance of safeguarding individuals susceptible to scams, highlighting the significant financial losses incurred annually due to fraudulent activities targeting vulnerable communities.
Rocio Concha, director of policy and advocacy at consumer group Which?, lauded the proposed measures as a positive development in combating fraud. She stressed the significance of banks being able to delay transfers to protect customers potentially falling victim to scams, such as authorised push payment fraud where individuals are coerced into transferring money to fraudsters. As instances of purchase scams and romance scams, exploiting emotional vulnerabilities, continue to rise, it becomes crucial for banks to have mechanisms in place to safeguard their customers.
In cases where a bank suspects fraudulent activity, they are required to notify customers about the delay in processing and provide guidance on unblocking the transaction. Additionally, banks are obligated to compensate customers for any interest or late payment charges incurred due to processing delays. The overarching goal of these regulatory changes is to fortify the defence against scams that exploit unsuspecting individuals and to mitigate the impact of financial fraud on consumers.
The move to extend the processing time of bank payments signifies a proactive step towards enhancing consumer protection and fortifying the financial industry’s resilience against fraudulent activities. By providing banks with a more extensive window for scrutinising transactions, the regulatory amendments aim to curtail instances of financial fraud and shield customers from falling prey to deceptive schemes. As the digital landscape evolves, it is imperative for banking practices to adapt to emerging threats and ensure the security and trust of consumers in financial transactions.