Could new rules for banks protect you from scams?

Francesca Giacomin breaks down the latest bank rules designed to shield you from internet scams

It’s 2024, and if you haven’t had a dodgy text from “RoyalMail_UK100” or a random email offering a suspicious inheritance from a prince, I’d love to know what kind of phone contract you’re on.

Scam messages have become as common as unexpected rain at a British barbecue. But, in what feels like an overdue twist, there’s some good news in the pipeline. New rules are stepping up to protect us from those sly cyber scammers.

The rise of the scam squad

So, you’ve probably been bombarded by texts or emails that start with “Hey, your delivery’s stuck,” or “URGENT: Your bank account has been compromised!”

Usually followed by a dodgy link that looks about as trustworthy as a 99p steak.

Before you know it, you’ve clicked through, and suddenly, you’re £500 lighter, and your bank is on the phone asking why you’re buying designer handbags in Dubai.

But here’s the kicker: scammers are getting smarter, thanks to the ever-evolving world of AI. These days, they’re not just relying on poorly worded messages; they’re using sophisticated algorithms to craft more convincing scams, personalise attacks, and even mimic loved ones and legitimate organisations.

That’s where the Government’s finally said, “Enough is enough!”

From now on, banks and other services will be legally required to reimburse you if you get scammed. But there are some catches.

What’s actually changing?

No, they’re not sending Liam Neeson to hunt down scammers (unfortunately), but the new rules are a big deal.

These frauds are known as authorised push payment (APP) scams, and the ballooning scale of the problem has prompted changes to the rules, which took effect on 7 October.

The mandatory fraud reimbursement scheme is being brought in by the Payment Systems Regulator (PSR) and includes these changes:

1. Affected individuals can expect to be reimbursed within five business days of making their claim. So, if you do fall victim, your bank is now obligated to return your money quickly, rather than dragging their feet.
2. There will be a maximum compensation of £85,000. This has been reduced from £415,000 after lobbying from the payments industry, but it’s still a significant amount to cover most fraudulent transactions.
3. There’s an optional £100 excess that firms can apply to a claim. However, some banks, such as TSB, have already pledged to waive this excess entirely. Plus, the PSR has ruled that this excess cannot be applied to “vulnerable” consumers, offering added protection for those at greater risk.
4. There will be a 13-month limit on claims. This means you have over a year to discover the fraud and still be eligible for a refund, which is good news if you’re not checking your account every day.
5. Once a bank or payment company has refunded the customer, the financial institution can then claim half of the money back from the bank used by the criminal to receive it. This move spreads accountability and incentivises banks to stop fraudsters before they strike.

What does this mean for you?

These new rules apply to authorised push payment (APP) scams. This is where a scammer convinces you to send them money (usually through elaborate deceptions).

It differs from other kinds of scams, where say your card details are stolen or cloned – which are already generally well protected and reimbursed by financial institutions.

The idea with these new APP protections is to make your financial institutions and service providers more accountable, and you a little safer from those predatory scams lurking in your text messages. While the Wild West of scams is still out there, we can feel slightly more reassured that if we do fall victim, we will hopefully get most of our money back.

Check out our latest podcast “Tax rumours, scammers and Amazon Prime Day”

Will it actually work?

Ah, the big question. Will these new rules make a difference, or are we just putting lipstick on a pig? Well, early signs are hopeful. But some of the caveats mean we should change how we behave.

For instance, with the maximum compensation now set at £85,000, making payments bigger than this in one go is a big no no. In the same way that we shouldn’t have more than £85,000 in any one bank account because this is the Financial Services Compensation Scheme (FSCS) limit.

Making payments bigger than this is very unusual, and likely to affect people making pensions transfers or buying property with cash. Both of which should be done with extreme carer anyway

The Government seems serious about making companies step up. Of course, it won’t stop every scammer—especially since their AI-enhanced tactics are likely to keep evolving—but at least now, you’ve got a better chance of clawing back your cash.

The battle between the scammers and regulators is on, and while we might not win every round, we’re certainly in for a fairer fight.

TL;DR: finally, some protection

In short, 2024 is the year the tables are turning on text and email scammers. With new regulations forcing banks and services to take more responsibility, we might just get a break from the constant barrage of “urgent” messages.

So, the next time you get an odd text claiming you’ve won a lottery you didn’t enter, breathe a little easier knowing the cavalry is (hopefully) coming.

Just don’t start clicking those links yet, alright?

Photo credits: Pexels