Huge overhaul of UK banking is set to bring freedom... for frauds! Here's how scammers could thrive
- Follows orders laid down by the Competition & Markets Authority
- Aims to provide greater competition and consumer choice
- With the emphasis on online rather than face-to-face banking, there are fears that fraudsters will run riot
- Laura Shannon looks at how scammers and fraudsters could thrive, and answers the key questions about this new banking world
One in six victims of bank fraud currently does not receive a full refund. Others have to fight tooth and nail to get their money back.
But things are about to get worse once the recommendations of the latest probe into the much maligned – and failing – current account market are implemented.
The new regime demanded by the Competition & Markets Authority – a regulator whose aim is to promote competition across industries – has technology at its heart.
Worrying: One in six victims of bank fraud currently does not receive a full refund
Consumers will be able to use cutting-edge apps to get themselves a better banking deal.
But experts fear it will come at a cost if the banking industry and other companies involved in bringing about change fail to invest in customers’ online security.
They are also concerned that consumers will have to shoulder all the financial cost of cyber crimes committed against them.
The authority wants banks to share data more freely, using the same kind of technology as Facebook and taxi company Uber.
This should enable customers to compare current account deals based on their personal history of transactions.
But it has raised security fears among analysts. Suren Thiru, head of economics and business finance at the British Chambers of Commerce, is warning the regulator to ‘tread carefully’.
The CMA wants banks to share data more freely, using similar technology to Facebook
And Sue Lewis, chairwoman of the Financial Services Consumer Panel, which advises the Financial Conduct Authority on behalf of consumers, is highlighting a greater risk of scams and fraud, ‘particularly for the least savvy consumers’.
The authority says privacy and security concerns are ‘paramount’ and that customers can decide what is shared and with whom.
But fraudsters have already proven they can bypass security features of banks and other businesses, and customers can be the ones left suffering as a result.
The push for banks to share data more freely has raised security fears among analysts
The Office for National Statistics has started recording fraud and computer offences in its Crime Survey for England and Wales.
Early estimates show that more than 1.4 million consumers lost money from bank account and credit card fraud in the year to the end of March 2016, but 229,000 victims received only a partial refund or none at all.
These statistics show only crimes against individuals and not small firms, suggesting that the total number of people affected could be even higher.
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