Customers could pay a 2.9p fee on all transfers over £30 to fund fraud scheme

Bank customers may be forced to fund a compensation scheme to help victims of fraud.

Trade body UK Finance has proposed a 2.9p transaction fee on all bank transfers over £30.

Banks will pay the charge and the money will be collected in a central fund that will be used to reimburse those who are scammed.

Pay.UK has proposed a 2.9p transaction fee on all bank transfers over £30 Pay.UK has proposed a 2.9p transaction fee on all bank transfers over £30

Pay.UK has proposed a 2.9p transaction fee on all bank transfers over £30

However, experts warn that banks could pass this levy on to customers. This may mean that they each have to pay a fee when making a payment worth over £30.

Alternatively, the charge could be passed on indirectly through savings rate cuts or higher borrowing costs.

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So far, only Nationwide and Lloyds have pledged not to pass the fee on to customers.

The consultation is being carried out by Pay.UK following a request for a change to the rules by UK Finance on behalf of seven banking groups.

Andrew Hagger from personal finance site Moneycomms told the Financial Times: ‘I’m not against the idea of a central “insurance style pot” but I wouldn’t like to see banks passing this fee on to customers, particularly as there’s scope to increase the fee over time. 

‘£5.8million is a drop in the ocean when compared with the combined profits of the banks involved in this proposed system, and it smacks of penny pinching if passed on to UK consumers.’

Consumer group Which?’s head of money Gareth Shaw also said banks should not make customers foot the bill.

The proposal comes three months after some of the UK’s biggest banks, including Barclays, Lloyds, HSBC, NatWest and Santander agreed to be bound by a new code designed to better protect victims of so-called authorised push payment scams.

These scams occur when consumers agree to transfer money into the bank account of a fraudster. Often victims were not refunded due to the perception that they were negligent in doing so.

Victims lost more than £350million to APP scams in 2018, with the new code, which came into force at the end of May, designed to make it easier for victims to get their money back. It said that those who took sufficient care and heeded any warnings should be reimbursed.

However, there were questions over who would fund any refunds made to fraud victims. The eight banking groups that signed up to the code at the outset set aside an initial pot of £100million, but that money was due to last only until the end of the year.

The consultation put out by Pay.UK closes in October, with a decision expected by the end of November. If approved, the new rules could come into force as early as next January.

Banks are also in the process of putting into place a system designed to prevent APP fraud before it happens. 

The ‘Confirmation of Payee’ system will let potential fraud victims know if the name of the account holder they are sending money to does not match the name on their transaction, and will come into force next March. 

Money Mail is campaigning for fairer treatment and refunds for the victims of bank scams.

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