Lenders crack down on Authorised Push Payment scams
Nine banks and building societies that are signed up to the Lending Standards Board’s (LSB) Contingent Reimbursement Model (CRM) code have been found to have made considerable efforts to crack down on scam transactions.
Authorised push payment (APP) scams are those in which a criminal tricks a consumer into transferring money to them. They differ from fraud, in which criminals get access to accounts and steal money without the account holder’s knowledge.
According the LSB’s ‘2022 review of adherence to Contingent Reimbursement Model (CRM) Code for APP scams’ there has been an increased focus on scam prevention.
Lenders were found to have adopted sound governance structures and suitable executive accountability, used customer transaction analytics to prevent suspicious payments and enhanced digital effective warnings to be more targeted.
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This progress on consumer protections comes at a time when financial security is of paramount importance to households across the UK, as the cost-of-living crisis continues to bite.
The review set out areas on which signatory firms should focus going forward. These included developing further safeguards for when payments are initiated through face-to-face interactions, enhancing customer communications, and conducting further work to support vulnerable customers.
While in some instances customer communications following a scam were found to be improving, actions in this area have been submitted to firms by the regulatory body where improvements are still needed.
This included ensuring the rationale for a reimbursement decision is made clear to prevent customers from falling for future scams.
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The LSB also reinforced that the code is not binding on customers, after finding examples where the rationale behind a reimbursement decision was based on the customer not meeting a ‘standard of care’.
“APP scams have a lasting impact on victims’ mental health and their trust in others. Across industries, a greater focus on scam prevention is needed to stop both the harm caused to customers and lost funds going on to fund serious, organised crime”, said Emma Lovell, chief executive of the LSB.
“Signatory firms, under the code’s requirements, have an improved focus on preventing APP scams from happening in the first place. We would urge those not signed up to do so, providing their customers with these increased levels of protection.”
The CRM code launched in 2019 and is the only set of protections for customers to detect, prevent and respond to APP scams.
The review was conducted across the nine firms that were signatories to the CRM code as of 1 February 2022.
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