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By Huw Jones
LONDON, Nov 1 (Reuters) - A mandatory 24-hour delay on all
first-time payments from one bank account to another would cut
mounting fraud in finance, UK lawmakers said in a report on
Friday.
Parliament's Treasury Select Committee said fraudsters stole
over 600 million pounds ($777 million) from consumers in the
first half of 2019 and regulators must crack down harder on
scammers.
With money transfers between accounts taking just seconds,
customers or their bank have little time to be aware that a
fraud has taken place, the report said.
It recommended a mandatory 24-hour delay on all initial or
first-time payments, while all future payments to that same
account would be at normal speed.
"If a situation arose whereby an initial payment was needed
instantly, a customer could ring their bank and additional
checks could be carried out for the funds to be released," the
report said.
Some reforms to cut fraud are already in the pipeline.
To transfer money at Britain's major lenders, the name of
the recipient account holder must be confirmed by the receiving
bank to stop fraudsters from diverting money.
Banks have said the deadline presents IT challenges and that
smaller banks won't be included until later on, but lawmakers
said the change should be introduced as a matter of urgency.
"If the implementation date of March 2020 begins to look in
doubt, regulators should consider introducing sanctions, such as
fines, to firms who have not met the deadline," it said.
Banks and card companies prevented 820 million pounds in
fraud in the first half of 2019, according to UK Finance, a
banking trade body.
But lawmakers want the Financial Conduct Authority (FCA) to
set a "challenging" timeframe for banks to freeze accounts when
there is evidence that money has been received fraudulently.
Banks use a voluntary industry code to determine when a
customer should be reimbursed for unwittingly sending money to a
scammer.
Lawmakers said the code should be made compulsory through
legislation and the FCA should introduce a common definition for
what constitutes gross negligence on the part of customers,
which limits compensation.
The FCA should also take timely and appropriate action to
stop "blanket de-risking", the report said in a reference to
banks cutting off relations with customers deemed to be too
risky.
($1 = 0.7719 pounds)
(Reporting by Huw Jones
Editing by Chizu Nomiyama)
