Payments suspected to be fraudulent will be delayed, giving banks time to investigate if the sender is genuine under new powers.
Once fraudsters take over personal bank data, they are enabled to immediately make a false transaction legitimately by posing as the account holder unless banks intervene.
Transactions do not need to be instant to appease customers especially where larger amounts are being transferred. In scenarios where fraud is occurring, the longer delay can benefit banks to undertake the due diligence of checking the customers’ normal online behaviours.
However, the time that payments can be delayed by banks will increase to 4 days to combat financial crime costing governments £460mn. Inflating over the years, financial related scams now account for a third of all crime committed in England and Wales.
The regulation increases the window in which transactions and deposits should be approved up to 72 hours as banks tackle rising scams. Customers can keep checking their app to see when the payment is approved.
Compensation will have to be paid for any interest or late payment fees that the customer incurs.
The new regulation for banks will come into force at the end of October 2024 – some worry too soon before the impact on property purchases can be rectified.
