LONDON – British banks will be allowed to hold up payment transfers for an extra three days if they have grounds to suspect a customer is being scammed, the government said on Tuesday.
Regulators are cracking down on ‘authorised push payment’ fraud, when people are tricked into transferring money. Britain has seen rise in such scams, with victims losing 485 million pounds to them in 2022, the finance ministry said.
The ministry said it will publish draft legislation to give payment services providers such as banks an extra 72 hours on top of the current end of next business day deadline if there are reasonable grounds to suspect fraud or dishonesty.
This will give banks a better chance of stopping money being sent to fraudsters, the British ministry said, adding that the new rule will be in force by Oct. 7.
“The legislation has been designed to minimise any impact on legitimate payments,” the ministry said.
UK Finance, a banking industry body, said it has long called for banks to be allowed to delay payments in high-risk cases where fraud is suspected.
“This could allow payment service providers time to get in touch with customers and give them the advice and support they need to avoid being coerced by the criminals who want to steal their money,” Ben Donaldson, UK Finance’s managing director of economic crime, said in a statement.
The start date coincides with action being taken by the Payment Systems Regulator to require banks and other payment firms to reimburse customers hit by push-payment fraud to a maximum of 415,000 pounds ($530,495) from October, split between the sending and receiving banks. ($1 = 0.7823 pounds)
