Community

The problem comes when Government decrees banks are responsible not only for getting funds to the correct party, but also what the beneficiary does with them. We need to be much clearer about the distinction between bank and consumer responsibilities or further restrictions will follow. 

The banks need to get their arms around this before liability escalates. COP is patchy and it is unreasonable to give identity risk to the consumer. In the cheques world, this risk rests with the banks who are far better placed to accept it and the system works well. If the same princinciple was applied here it would be much easier to defend those more difficult claims that transactions should have been blocked because they were not in the remitter's best interests.

Tony talks a lot of sense here (as he always does). Consumers are wary of push payments because there is no certainty of payee identity. As Tony says, there are many means by which this can be achieved but banks will never agree amongst themselves which scheme is best and when it should be adopted, so Government intervention is essential. The model for this is the Cheques Act which says it is the banks’ responsibility to ensure a cheque payable to Tony McLaughlin reaches Tony’s account and insists they put matters right if it does not. It has worked very effectively for more than 60 years  and I commend it to the PSR!

In the UK at least, the focus on strong authentication misses the point. Whilst it might allow banks greater assurance about customer instructions, it does nothing to help customers accurately describe their intended payee. In consequence consumers continue inadvertantly to pay huge sums to fraudsters, many of whom are organised criminals. The industry should hang its head in shame and deal with this situation decisively. 

This is more than a little over-dramatic. With around 70,000 ATMs, 11,000 Post Office branches and 9,000 bank branches in the UK there's still a long way to go. Lloyds announcement about commercialising cashback seems positive, however. When I was involved in the remittance market, I recall colleagues in India referring to this as the 'Human ATM'!

Spot on, Bob. I've often said that if, heaven forbid, I ever need brain surgery then I'll employ an experienced brain surgeon and not someone who has only read the instruction manual.

This incident really brings home the scale of UK banking conversion to digital channels. 10 years ago we would have seen this as a side issue and diverted customers to ATMs, telephony and branches. Such is the current prevalance of online, however, and the concurrent scaling back of these alternatives that they can no longer take the strain when something goes wrong. This is a significant point. Given that technology will inevitably fail from time to time should the industry scale up its contingency or should consumers create their own by using multiple banks and/or payment processors? It will be interesting to see how Morgan and Bailey will conclude on this, if at all.

RBS/NatWest used to have one of the strongest online security regimes in the industry. By insisting on authenticating new payees using a chip card in an offline reader, users were protected from almost all types of fraud attempt. The decision to drop this requirement for payments under £250 made from the mobile app was an attempt to improve utility and the compromise will have been recognised. RBS/NatWest must, however, take responsibility and treat all claims for fraud quickly and sympathetically. Unless the bank can show gross negligence, funds must be restored quickly whenever a customer claims fraud has taken place.

The PSR is making a fundamental mistake in assuming that sale of VocaLink will improve competition and innovation. Its role as a shared infrastructure host is to provide the shared interoperability layer cheaply and effectively. Competition and innovation should occur at the individual bank level but doesn't because there is no marketing cadre with the knowledge and ability to make that happen. A sale to MasterCard will make their position worse and the PSR should avoid it at all costs.

This is a step in the right direction, but is heavliy flawed by the paying bank's ability to defer initial action by up to two days (four if the error occurs at a weekend). In a world of instant payments, errors demand action in real time too.