As a proportion of payments sent, TSB's APP losses are the highest of all high street banks, according to the latest figures from the Payment Systems Regulator (PSR).
Blog written by Jason Costain 14 May 2024
Since April 2019, challenger bank TSB has kept its promise to refund most customers if they suffer from fraud.
However, figures released by the PSR in October 2023 show that TSB is allowing proportionately more of its customers to send money to Authorised Push Payment (APP) scammers than any other UK Bank:
The PSR publishes APP Fraud data to allow consumers "to see the full extent of how well your bank has performed in tackling APP fraud... in the last year, compared to other UK banks and payment firms".
It's important to note that the APP fraud losses above aren't absolute values. Instead, the PSR is attempting to compare different sized banks against each other (hence the use of the amount of APP Fraud per £million of payments sent).
It is quite possible that TSB's position at the top of this table is due to their customers awareness of TSB's well publicised fraud refund guarantee, which is likely to prompt more customers to report a scam to TSB. The upcoming changes from the PSR that will make all banks liable for APP scams from October 2024 may well level the playing field for TSB.
Benchmark data like this is an incredibly useful tool for any fraud manager who wants to compare their performance against peers. Even if you don't know much more than what's in the table above, you will be able to set a target for where you want to be in the the table;
Perhaps comparable to a bank with a similar customer base and mix of business?
Perhaps you want to be the best bank in the UK?
Perhaps you'd just prefer to be middle of the pack?
Benchmarking allows you to set some goals you and your team can go after. Many UK Finance members can get access to this kind of data on a quarterly basis, so there's a good chance someone on your team already has access to it. Make sure it is being used.
In any case, a bank that finds itself near the top of this table is likely to receive a greater degree of attention from the regulator so its well worth knowing where you rank and what might be causing losses that rank you above your peers.
TSB famously promised to refund all innocent scam victims in 2019, and it has stood alone with this promise for the 5 years since. The percentage TSB refunds has actually been steadily falling since the guarantee was announced, and it now stands at 91% by value, 94% by volume. This is perhaps an indication that TSB has refined its refund elligibility criteria over the years. It might also be a reflection of the complexity of Authorised Push Payment Fraud refunds, particularly since the emergence of cryptocurrency investment scams - the question of "who is liable" when a victim sends money from their bank account to a crypto wallet that they control is one that still vexes the Financial Ombudsman Service.
Fraud defence is not simply just about refunding customers when they suffer from fraud, it's about preventing and protecting customers from the trauma of fraud in the first place, and in doing so disrupting the criminals business model.
Reducing the level of fraud is what UK society dearly needs and it should be a question that all banks put some thought into, particularly those that are nearer the top of the APP fraud performance league tables.
Jason Costain
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