Financial Ombudsman Service reminds banks to treat fraud victims fairly

The Financial Ombudsman Service has told banks they should take into account the evolution and sophistication of frauds and scams – and not simply assume that their customers were “grossly negligent”.

In its latest edition of ombudsman news, the ombudsman service details how it regularly hears from banks that consumers who have been scammed have acted with gross negligence – and therefore banks aren’t liable for the money their customer has lost. However, the ombudsman service says there is a very high bar for being grossly negligent – and this is far more than just being careless. This is because of the increasingly sophisticated scams which fraudsters are using that are becoming even more difficult for consumers to spot.

In pretending to be a consumer’s bank or other entity so they can obtain personal details, fraudsters are increasingly abusing technology to their advantage. Earlier this year, the ombudsman service even heard that fraudsters were contacting people and pretending to be the ombudsman – making it look really authentic as the ombudsman service’s number appeared on the Caller ID.

The ombudsman service doesn’t ever cold call people and will never ask consumers for payment. In the same way, banks will never ask consumers for banking passwords or their PIN. If in doubt, hang up the phone.

The ombudsman service also sees situations where people should have done more to protect their money. While each case is looked into individually, things like keeping a PIN with a bank card, or giving security details to someone else, will make it more difficult to get money back.

Caroline Wayman, chief ombudsman and chief executive of the Financial Ombudsman Service, said: “Each year we see more than 8,000 cases involving fraud and scams – everything from disputed cash withdrawals and identity theft, through to mobile phone SIM-swaps and fake banking websites. And where criminals are involved, both banks and their customers often tell us in strong terms that they haven’t done anything wrong.

“But it’s not fair to automatically call a customer grossly negligent simply because they’ve fallen for a scam. That’s especially true in light of the sophisticated way criminals exploit banks’ security systems – and convince customers that their money is at risk.

“We often remind banks that they need to support what they’re saying with facts. And if they can’t do that, it’s likely we’ll tell them to cover the money their customer has lost.”