TSB has become the first British bank to commit to refunding any of its 5.2 million customers who fall victim to online fraud.
The move is being seen as an attempt to rebuild its reputation with its customers after the traumatic IT meltdown last year which saw 1.9 million of its customers unable to access their cash and some losing cash in online scams.
But it is also seen as a response to a wider concern by British savers who have lost millions of pounds to online fraudsters in recent years. Some analysts believe as many as one in four consumers became victims during 2018.
The payback guarantee will cover transactional fraud losses, including the notorious ‘push payments’ where banks have previously refused compensation after savers were tricked into authorising payments into fraudulent accounts.
TSB’s executive chairman, Richard Meddings, said: “The vast majority of fraud claims across UK banking are from innocent victims of fraud, who have been targeted by criminals and organised gangs. However, all too often these customers must fight to be refunded and are not treated as victims of crime.
“Our own experience last year gave us an in-depth insight in the nature of these frauds, but above all we felt that offering a guaranteed refund – and accepting that customers may have made an honest mistake – was the right thing to do.
“In some cases people have been losing life-changing sums of money. We want to provide peace of mind to our customers . . . if a TSB customer innocently suffers a fraud loss on their account after being targeted by a criminal, we’ll cover it.”
A TSB spokesman said: “Bank fraud is a growing problem with devastating effects for customers across the UK.
“As people are increasingly going digital and online shopping has doubled over the past five years, the propensity for fraud has also increased as has the sophisticated means by which consumers are targeted,”
Recent figures released by UK Finance, the trade body for British banking, showed financial fraud jumped by 16% last year, costing British individuals and companies more than £1.2 billion.
There was praise for TSB from consumer watchdog Which? with money expert Jenny Ross saying: “For years, people have lost life-changing sums of money to increasingly sophisticated scams, and then faced a gruelling battle to get their money back. “
We know that banks are far better placed to spot and prevent scams than their customers. TSB has rightly recognised this and stepped up to take responsibility for refunding its customers across all types of fraud.
“All banks must now follow TSB’s lead and ensure that their own customers are not left paying for the cost of this crime.”