Banks contemplate deploying authority to delay processing payments
Date
10/8/2024 8:32:44 AM
(MENAFN) In a bid to combat the rising tide of fraud, banks may soon have the authority to delay processing payments by as much as 72 hours when they suspect fraudulent activity. The United Kingdom Treasury has announced proposed legislation that would allow financial institutions additional time to investigate transactions deemed suspicious. Currently, banks are required to process or reject payments by the end of the next business day, but the new measures aim to enhance consumer protection against fraud.
This initiative comes on the heels of a contentious debate surrounding the maximum refund amount banks must provide to victims of "authorised push payment" fraud, which is the most prevalent form of financial scam. In these cases, individuals or businesses are deceived into transferring money directly to a fraudster's account. Following pressure from the banking sector, the government set the refund cap at EUR85,000 per claim, a policy change that will take effect on Monday.
The government believes that empowering banks with the ability to pause transactions will significantly aid efforts to reduce the estimated EUR460 million lost to fraud in the past year. This type of financial crime accounts for more than one-third of all reported criminal activity in England and Wales, encompassing various scams, including those related to purchases and online romance.
Under the proposed regulations, if a bank identifies potential evidence of fraudulent activity related to a payment, it will be required to inform the customer about the delay. The bank will also need to provide guidance on the necessary steps the customer must take to resolve the issue and unblock the transaction.
As the financial landscape continues to evolve, these measures reflect a growing commitment to safeguarding consumers and tackling fraud at its source. While the extended investigation period could lead to delays in transaction processing, proponents argue that the additional scrutiny is essential for protecting customers from financial loss and maintaining trust in the banking system.
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