Banking Ethics...UK Scams loophole closed
- office69370
- 13 minutes ago
- 2 min read
The little known UK scam refund loophole that triggered a landslide of FOS complaints…
The new scam refund rules from the Payment Systems Regulator that came into force in Oct 2024 quietly closed a long-standing loophole:

➡️For the first time, banks were REQUIRED to let scam victims know that if they weren’t happy with their banks refund decision they could complain to the Financial Ombudsman Service.
🛑 For nearly a decade prior, when declining (or offering a partial) refund to scam victims, most UK banks had not been signposting the FOS when they perhaps should have.
Under UK FOS rules, when a customer complains (or expresses dissatisfaction) to their bank about any topic, the bank is required to tell the customer that they can take the banks final decision to FOS if they aren't happy with the outcome. Strictly speaking, a scam loss isn't a "complaint", therefore, UK banks haven't felt obliged to treat them as such. In this way, the many thousands of UK scam victims who lost money to scams did not realise they had another route.
Disappointingly, UK banks knew that the FOS would view such cases favourably. A near-100% uphold rate of consumer scam complaints was being seen by banks at the FOS from 2019 onwards. Nevertheless many banks chose not to tell the customers about the FOS. This key ommisson was often pointed out by journalists, Martin Lewis, and Claims Management Companies, but many victims would not have known.
In at least one bank I know of, it was a deliberate commercial decision to omit to mention a customer's FOS rights.
I believe this is the main reason why scam complaints have shot up in the second half of 2024 vs the same period in 2023. Customers are now being told about their FOS rights when they don’t get a full refund. Many appear to be taking this path, now that they know.
🚩Ethics in Banking: when an institution knowingly chooses NOT to tell a customer they could get their life savings back, is this ethically sound?
The UK Consumer Duty is clear. Banks must:
➡️ Act in good faith
➡️ Avoid foreseeable harm to retail customers
➡️ Deliver good outcomes for retail customers
➡️ Customers should get the help they need, when they need it, without unreasonable barriers
You can read the Mail Online article about the FOS scam complaints increase here:
By Jason Costain, Director of Javloc
Jason Costain is a consultant specialising in fraud prevention and financial crime defence. Jason is the founder of Javloc Ltd, and has leveraged over 30 years of expertise to assist banks and organisations in strengthening their defences against fraud, and financial crime
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