Funding APP scam reimbursement: 2.9p per Faster Payment proposed

eskbanker

I don't think it's been mentioned on here yet but UK Finance have issued a change request proposing the introduction of a 2.9p levy on all (>£30) Faster Payments transactions, to be contributed into a central fund from which APP scam reimbursements would be paid.

The big question is the extent to which the banks would seek to pass this charge on to their customers....

Discussed a few days ago in the FT at https://www.ft.com/content/5d63715e-c906-11e9-af46-b09e8bfe60c0 (behind paywall but accessible via Google by searching on "UK banks plan transaction levy to compensate fraud victims").

Full details at
https://www.wearepay.uk/wp-content/uploads/2019/08/Pay.UK-Call-for-Information.pdf

masonic

Wow, that would seriously distort consumer behaviour and be anti-competitive for new savings account providers and other niche financial services providers.

tempus_fugit

I wouldn't be happy if they passed this on to the customers, especially as APP scams *should* be far fewer now that everyone is more aware of them. (Yeah right!)

Flobberchops

Unsurprising, to be honest. There is only a finite amount of money banks can pay out, whether that money goes to victims of fraud and scams, compensation payouts, savings interest, shareholder dividends, staff salaries, keeping the physical network running, maintaining IT systems, etc. If spending in one area increases, another area has to take a hit - or alternatively, formerly free products and services get withdrawn or cease to be free at the point of use.



I've said it before, but the average UK current account holder is accustomed to all kinds of privileges that simply don't exist on the continent or across the pond. The average bank customer pays nothing for their banking. Domestic payments, both in and outgoing, are overwhelmingly free. They get a free debit card (with unlimited free replacements), free use of mobile banking apps, free online banking which is accessed using a free card reader. They can choose to receive monthly statements free of charge, or use free in-branch printing services. Free cheque books, free credit books, no fee to process cheques, no fee to process bills. If this customer decides to visit a physical branch they expect to be seen promptly by counter staff or by an advisor, or else they want there to be multiple, functional self-service machines. Out of hours they have fee-free access to Link ATMs and can still access customer services 24 hours a day using a local-rate helpline. Furthermore bank customers expect to be wooed with loyalty rewards, switch incentives, cashback, and savings accounts that pay interest above the base rate. In terms of security, account holders expect the first £85000 of their money to be 100% safe, they want to be covered by the Direct Debit guarantee, they want fraudulent transactions to be stopped in real time (and they want compensation when their genuine transactions get delayed by the same anti-fraud processes), and more recently they want the bank to reimburse them even when they incur financial losses that aren't the banks fault. All of these services and benefits, and our customer hasn't paid a penny.


The punchline comes when the bank charges them ten quid to sit in overdraft for the best part of a month, and the customer declares the bank is "greedy" and they should have the fees waived because they are "a loyal, valuable customer" and threaten to take their "business" elsewhere.

colsten

Flobberchops wrote: »

.....All of these services and benefits, and our customer hasn't paid a penny.......

Whist I fully agree with the sentiment of your post, I don't agree that the customer hasn't paid a penny. Each and every thing a bank - online or bricks & mortar - does is paid for by customers. It might not be very transparent how we pay for it or how much a given customer pays, but pay for it we do.

masonic

What we need is an "I'm not a numpty" box we can tick when making payments to opt out of such a levy and of course the ability to benefit from the central fund.

londoninvestor

masonic wrote: »

Wow, that would seriously distort consumer behaviour and be anti-competitive for new savings account providers and other niche financial services providers.

You'd think it would distort bank behaviour as well. Why invest in anti-fraud measures, when the price of failures will be paid by a central fund anyway?

(Edit - though admittedly this is for the 'no blame' fund which wouldn't come into play if the bank had been grossly irresponsible)

masonic

londoninvestor wrote: »

You'd think it would distort bank behaviour as well. Why invest in anti-fraud measures, when the price of failures will be paid by a central fund anyway?

(Edit - though admittedly this is for the 'no blame' fund which wouldn't come into play if the bank had been grossly irresponsible)

Actually I think you have a good point. It wouldn't take much effort for a bank to avoid being considered grossly irresponsible. Instead of trying to prevent customers from transferring their cash to thieves, including technological measures that might help them realise what they are doing, they'll instead pay the levy with a view to bailing said customers out when they fall for such scams. The scammers will be the main beneficiaries of such a central fund, and every customer using FPS will be helping to subsidise the scammers. Great solution!

Vortigern

Would this fee apply to standing orders?

If not, we have an obvious workaround.

TiberUK

I wondered what excuse banks would find to start charging us for online banking.

Flobberchops

colsten wrote: »

Whist I fully agree with the sentiment of your post, I don't agree that the customer hasn't paid a penny. Each and every thing a bank - online or bricks & mortar - does is paid for by customers. It might not be very transparent how we pay for it or how much a given customer pays, but pay for it we do.

The customer in my example hasn't paid a penny. "Scott Free" customers like this - who make up a sizeable proportion of account holders - are effectively subsidised by every customer who has an overdraft, mortgage, loan, insurance, fee-paying packaged account, etc.



As an aside I believe I just tipped your Thanks to 10,000, congratulations