MP helps bring about new rules to compensate fraud victims

I am pleased that a constituent who was the victim of online payment fraud has now been fully compensated thanks to my intervention.

Roz Collins from Malton was the victim of a phishing phone scam whereby a fraudster convinced her to divulge personal information to gain access to her account online and steal thousands of pounds. She immediately contacted the police and her bank; the police agreed that this was a case of fraud, however, the bank was reluctant to refund Mrs Collins.

Her bank claimed that she had been grossly negligent. I took up her case with her bank and the Financial Ombudsman making the case that consumers are disadvantaged by breaches of confidentiality within banks’ own systems. They have now overturned their decision and Mrs Collins’ bank agreed to pay her losses in full.

Roz Collins urged other victims of bank fraud to “not give up. Banks must be held accountable for keeping our data safe; not all technology for online banking is secure so it can be hacked, especially when information has been obtained either by a virus or an insider”.

This is all part of the work I have been doing with the APPG on Fair Business Banking, which I co-Chair. Both Richard Emery, of 4KEYS International, who work with a number of victims of fraud, and I have sought to clarify the definition of gross negligence and suggested a scheme be developed for historic cases so that they be proactively reopened to have their decisions reappraised. I wrote letters to the Chief Executive of the Financial Conduct Authority, the Payment Systems Regulator and the Chair of the Treasury Select Committee to suggest the same. Since these meetings and with this momentum, UK Finance has agreed to look again at historic cases perhaps applying new rules.

Richard Emery said “I have greatly valued the support of Kevin Hollinrake and his team in working with the Financial Ombudsman Service to develop a new approach to the question of ‘gross negligence’ in cases of unauthorised transactions. This has resulted in significant refunds to victims of this type of online bank fraud”.

The Financial Conduct Authority has now announced that it has made it easier for victims of bank transfer scams to claim compensation by extending the jurisdiction of the Financial Ombudsman Service.

The APPG on Fair Business Banking and Richard Emery, had also successfully argued that victims were only able to complain to the bank that sends the money. Now, following the changes, victims of authorised push payment (APP) fraud will also be able to complain to the bank that receives the money. Those who have suffered from scams are then able to take their complaint to the FOS if they are unsatisfied.

Losses last year due to APP fraud totalled £236 million, which was stolen from 42,837 victims. Cases of online fraud and phone fraud have increased in volume since 2012; online, this has risen by as much as 19 per cent in one year. Banks and card companies work to prevent £2 out of every £3 of attempted fraud but the amounts lost are significant, and can be devastating to the individual victims who can lose thousands or tens of thousands of pounds due to fraudulent activity.

A number of MPs write to me about their constituents who have suffered from fraudulent scams and I will continue my work with the APPG on Fair Business Banking to ensure victims are compensated and have reasonable routes for redress.