Banks need to improve their ‘cracking’ fraud protection systems, says Vince Cable
- Former business secretary said lenders should pay for fraud
- Cable urged House of Commons Treasury Committee to make recommendations to government
- He added: ‘These are the big data demands society rightly places on companies, and banks should not be exempted from them’
Banks need to improve their ‘cracking’ fraud protection systems and compensate small businesses that have lost their money decently, says Vince Cable.
The former business secretary, who was seen as the ‘scourge of banks’ during the financial crisis, said lenders should compensate companies affected by fraud.
Britain’s major banks have a voluntary code that requires them to compensate individual victims, as long as the person has taken reasonable precautions to protect themselves from fraud.
Banks need to improve their ‘cracking’ fraud protection systems and properly compensate small businesses scammed out of their money, says Vince Cable
This is intended to encourage banks to improve their own protection against fraud, but they are not obliged to reimburse customers who are defrauded, even though the sums lost are usually much larger.
Cable says banks should broaden the compensation net. He said: ‘Banks urgently need to update their cracking anti-money laundering (AML) technology. Because the compensation they pay to fraud victims is limited, they are not well incentivized to invest in this technology, meaning fraud increases as tech-savvy fraudsters advance.
“Banks should have a legal obligation to pay compensation when errors in their AML checks cause losses.”
Cable urged the House of Commons Treasury Committee to make recommendations to the government. He added: “These are the big data demands society rightly places on companies, and banks should not be exempted from them.”
Tory MP Kevin Hollinrake, co-chair of the parliamentary group for fair business banking, said: ‘Banks want companies to pay online because it lowers their costs, but they don’t train people, which means that checks and balances are lost.’
Industry association UK Finance said: “The industry is tackling fraud on all fronts, investing millions in technology to protect customers and working closely with law enforcement to stop the criminal gangs responsible and neutralize the threat.”