Warning bank customers could face £100 charge if scammed from October 7

A new scheme to compensate victims of soaring bank fraud could see some banks charge £100 to those affected. The option to impose this 'excess charge' is part of the new rules, and while some have ruled it out, others have not.

Controversy has already hit the new compensation system after financial institutions successfully pressured government and regulatory bodies to lower the maximum payout from £415,000 to £85,000. Designed to safeguard the numerous Britons duped by scammers impersonating entities from HMRC to solicitors, police, and banks, the incoming system aims to protect against fraudulent transfers to illegitimate accounts.

Annually, about 200,000 UK residents fall prey to what's known as Authorised Push Payment fraud, with 2023 seeing losses around £460 million. Yet for many, where the fraud loss is under £100, being charged a £100 excess would mean no compensation at all.

Liz Edwards, a money expert at Finder, commented: "Based on 2023 figures, more than 58,000 cases would have resulted in no refund if all companies had applied the excess. £100 is a lot of money to many people, and banks need to be clear with customers where they stand."

According to UK Finance, 32 percent of push payment fraud incidents involve sums of £100 or less. While not all banks and payment providers plan to introduce an excess charge, they are required to inform customers about their stance in the coming days.

TSB, Nationwide, Virgin Money, Clydesdale Bank, Yorkshire Bank, and AIB have all told the Financial Times that they won't pass on any charges to customers who are conned by scammers. NatWest, on the other hand, is considering a fixed £100 excess for reimbursement to customers, stating: "This [will be] assessed on a case-by-case basis and with regard to the specific circumstances of each customer."

Metro Bank together with payment service providers Modulr and Zempler say they will impose the full £100 excess. According to the new regulations, these fees must not be borne by vulnerable customers who are at a heightened risk of harm due to personal situations.

Nicola Bannister, TSB's customer support director, revealed that a third of the fraud claims the bank deals with are for sums of £100 or less and many are tied to purchase scams originating from social platforms. She emphasised that "£100 can be a lot of money to somebody," as she urged other banks to be clear about whether they will impose excess charges.

A collection of other financial institutions including Barclays, Lloyds, HSBC, Monzo, Starling, the Co-Operative Bank, and Danske Bank have yet to reveal their approach towards excess charges. Nonetheless, they are planning to reach out to their customers with revised terms before the new regulations commence on October 7.

UK Finance has recorded a 12 percent increase in the volume of push payment fraud cases year on year. Under the existing voluntary reimbursement system, banks have returned £287mn to victims, equating to a reimbursement rate of 62 percent.