Major Banks Incorrectly Rejected Over Half of Scam Compensation Claims Since 2020

Financial Ombudsman Service (FOS) data reveals that the bank at the top of the leaderboard for overturned compensation denials is Natwest, which reportedly made the wrong call in 54.4% of cases, closely followed by Santander (53.6%) and HSBC (53%).

UK banks have a duty of care to their customers to protect them from scams and fraud on their accounts using a variety of means, such as:

• Monitoring customers’ accounts, particularly those vulnerable to fraud or scams.
• Providing effective warnings to customers via online and mobile banking to make them aware of scam tactics.
• Detecting suspicious activity on customer accounts and delaying or stopping transactions until they have been investigated.
• Using industry intelligence to prevent fraudsters from creating bank accounts for the purpose of scams, money laundering and financing terrorism.

According to James Daley from Fairer Finance, a group campaigning to create fairer finance markets for consumers and businesses:

“The law is very clear that the onus is on [banks] to prove a customer has been negligent if they want to reject a fraud claim. But the banks need to have a lot of evidence to do that, otherwise they should be refunding their customers immediately.”

In the overturned cases reported by FOS, the decision to refund the customer is primarily based on the lack of protection given to the customer by the bank to uncover and prevent money from being lost to the scam.

Refund requests that banks reject can be taken to FOS for an independent investigation and decision. An Investigator will consider the claim taking into account the individual circumstances around the scam as well as any relevant legislation in place at the time.

If both parties are not satisfied with the investigator’s initial judgment, the complaint can be sent to appeal and considered by an Ombudsman for a final decision.

Many of the claims taken to FOS in the past three years involved an element of Authorised Push Payment (APP) fraud, in which scammers manipulate victims into willingly transferring money from their bank accounts into the scammers’ accounts. This is often done using a form of social engineering, such as impersonation or even befriending the victim as part of a romance scam.

Unfortunately, once the money has entered the scammers’ account, it is usually moved swiftly to another account – usually overseas – and is virtually impossible to recover. However, as shown by the FOS figures, there are still options for accessing compensation from your bank after being scammed, and TLW Solicitors can help.

Sarah Spruce, Head of the APP fraud team at TLW Solicitors, commented on the figures from FOS:

“These figures from FOS mirror exactly what we have been seeing with our own clients; many have been refused compensation from their bank following a scam but, with our help, have successfully recovered the majority or full amount lost. There is clearly more that banks should be doing to protect customers from scams, but they don’t seem to be doing it.”