Banks will have the power to delay and investigate payments for up to four days if fraud is suspected under new rules put forward by the UK government.
Under the proposals, deposit takers will have the power to block accounts for an additional 72 hours. Currently, they must either process or refuse a payment by the end of the following business day.
Banks must have reasonable grounds to suspect fraud and must inform the customer when a delay is being implemented.
“This is a positive step in the fight against fraud,” said Which? director of policy and advocacy Rocio Concha. “While it should not affect the vast majority of everyday payments, it’s important that banks can delay a bank transfer and take action if they think a customer is being targeted by a scam.”
UK Finance’s managing director of economic crime Ben Donaldson added: “UK Finance has long called for firms to be allowed to delay payments in high-risk cases where fraud is suspected, and we are delighted to see proposed new laws supporting this.”
Fraud is an escalating issue in the UK.
According to the Financial Ombudsman Service, disputes in the UK over fraud and scams recently hit a six-year high.
Earlier this year, Lloyds Banking Group PLC (LSE:LLOY) recorded a 22% surge in ‘romance scams’, which are characterised by fraudsters exploiting individuals seeking romantic connections via fake profiles on social media and dating apps.