The UK government has recently stated that banks will now have the ability to postpone transactions for up to four days to allow them to have sufficient time to investigate any potential fraud attempting to be committed. Presently, banks are required to approve or dismiss transfers by the following business day, but the upcoming legislation reforms it. This change is expected to help greatly with protecting customers’ funds and confidential information from being jeopardized. The new regulations will come into play at the end of October, with the original date being pushed back slightly.
In the past, banks have had to have a reasonable cause for suspecting fraud to be able to open an investigation, though they have had to also deal with customers who want an immediate money transfer. Fraud is already the most common offense in the UK, accounting for one-third of all criminal activity in the country. Hence, criminals have been able to steal billions of pounds by impersonating legitimate organizations or by convincing innocent victims to fall for their elaborate romance scams.
The government has stated that fraud is clearly a significant issue, and that it needs to be addressed. To that aim, banks have been given permission to take longer in agreeing to any transactions in order to investigate them more thoroughly. By having a few extra days, banks can look at the client’s spending history and reach out to the customer, if necessary, before allowing the transaction to continue. UK Finance, which is the country’s banking trade organization, has approved of the new regulations. Consumer protection groups believe that the new powers should be utilized carefully and with appropriate scrutiny.
Although the changes will serve to protect people’s funds better, it may not be an ideal scenario for account holders that rely on online banking or mobile transfers, who have become accustomed to near-instantaneous transfers. However, banks will need to notify customers of any delays, explain what has caused the delay and how they intend to correct it, and offer compensation if the delay resulted in additional fees for the customer. The new rules will come into effect a few weeks after the announcement of another, more stringent, mandatory scheme, where victims of fraud will get compensation of up to £85,000 in refunds from banks within five days of an authorized push payment scam
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