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ombudsman news

issue 145

August 2018

fraud and scams: a moving picture

It was only relatively recently, in 2015, that we shared our insight into banking complaints involving phone fraud. Back then, it seemed the fact older people were more likely to use landlines meant they were particularly at risk of “no hang up” scams.

Today, it’s often loopholes in new technologies, rather than in old ones, that fraudsters are using to their advantage. Your first step toward being scammed may be putting your details into an identical, but fake banking website – or responding to a text message that, on the face of it, looks like it’s from your bank.

Unlike most other complaints we see, complaints about fraud and scams involve – whether it’s accepted or suspected – the actions of a criminal third party. So it’s understandable that, in many cases, both the bank and their customer tell us in strong terms that they’re not responsible for what’s happened.

This makes it harder for us to reach an answer both sides are happy with. But it doesn’t mean usual standards don’t apply. As our case studies illustrate, we’ll expect to see clear evidence that banks have investigated thoroughly – and reflected hard on what more might have been done to protect their customers and their money.

We also often hear from banks that their customers have acted with “gross negligence” – and this means they’re not liable for the money their customer has lost. However, gross negligence is more than just being careless or negligent. And as our case studies show, the evolution of criminals’ methods – in particular, their sophisticated use of technology and manipulative “social engineering” – means it’s an increasingly difficult case to make.

If there’s anything to be salvaged in the wake of fraud and scams, it’s what we can learn about how they happened and what needs to change. In this edition, alongside our lead ombudsman Pat Hurley, the Payment Systems Regulator’s Hannah Nixon gives an update on regulatory action – including developments in the area of “authorised push payment” fraud, where the FCA is currently consulting on giving us more powers to help. Fraud expert Richard Emery gives his view on what needs to be done to stop more people losing more money – and UK Finance’s Katy Worobec outlines the industry’s response.

The insight we share into what we’re seeing – including through ombudsman news – is an important part of our work to help prevent complaints arising in the first place. That’s especially important for issues such as fraud and scams, where there’s high potential for vulnerability and harm.

And in the same way as we want people to learn from our experience, I’m grateful for the insight Richard Lloyd’s independent review of our service, published in July, has given us into how we can do things better ourselves. We’ll report on the action we’ve taken in response to his recommendations before the end of the year.

Caroline Wayman

Image: Caroline Wayman: 
chief ombudsman
Caroline Wayman
chief ombudsman

ombudsman news gives general information on the position at the date of publication. It is not a definitive statement of the law, our approach or our procedure.

The illustrative case studies are based broadly on real-life cases, but are not precedents. Individual cases are decided on their own facts.