Lloyds, HSBC, NatWest, and other major UK bank customers may soon face delays of up to three days for their payments under new proposed rules designed to provide banks with more time to investigate potential fraud. The UK Government is considering legislation that would extend the timeframe for processing payments by up to 72 hours. Presently, banks must either process or decline a payment made by a customer by the end of the following business day. The proposed extension aims to give banks additional time to scrutinise transactions flagged as suspicious and potentially prevent any high-risk payments from being completed.
Tulip Siddiq, the economic secretary to the Treasury, stressed the importance of safeguarding individuals from scams that result in the loss of hundreds of millions of pounds each year. The proposed delay in payments aims to empower banks to investigate dubious transactions further and disrupt the operations of fraudsters. Rocio Concha, the director of policy and advocacy at consumer group Which?, hailed the proposals as a positive step in the battle against fraud, emphasising that these measures should be judiciously applied without significantly impacting routine payments.
In the event a bank discovers evidence indicating potential fraud, it must notify the customer about the delay and provide guidance on remedial actions to unblock the transaction. Banks will also be required to compensate customers for any interest or late payment charges resulting from payment delays. These regulatory amendments aim to combat authorised push payment (APP) fraud, where individuals are coerced or deceived into transferring funds to fraudsters. Instances of purchase scams, involving payments for nonexistent or counterfeit goods and services, as well as romance scams targeting vulnerable individuals with false promises of romantic relationships, have been on the rise.
The proposed changes seek to fortify consumer protection measures and enhance the early detection and prevention of fraudulent activities in the financial ecosystem. By affording banks more time to investigate suspicious transactions, the intention is to minimise the impact of fraudulent schemes on unsuspecting individuals. The implementation of these regulatory adjustments underscores the ongoing commitment to fortifying the financial security of bank customers in the face of evolving cyber threats and fraudulent activities affecting the banking sector.