Financial Conduct Authority publishes preliminary findings of review into mobile banking

The Financial Conduct Authority (FCA) has published a report exploring some early findings of a review into mobile banking services, setting out the possible risks to consumers and areas that firms should consider when developing their services.

Mobile banking, which includes contactless payments, financial transfers and account monitoring, all via mobile devices such as smartphones and tablet computers, will be considered in greater depth by the FCA in the full review to be published in the first half of 2014.  

The FCA has objectives to ensure an appropriate degree of protection for consumers, and to promote the integrity of the UK’s financial system. In publishing this interim report the FCA is seeking to help consumers understand some of the potential risks of mobile banking and setting out to firms an early view of what it will be reviewing.

The full review, which will follow this report, includes both high street banks and firms not traditionally associated with banking, such as mobile phone networks.

Clive Adamson, director of supervision at the FCA:

"Mobile banking is an exciting development in financial services, with increasing numbers of consumers attracted to the convenience of banking on the move. With the market growing, now is the right time for us to take stock and, as part of the FCA's forward looking approach, to ensure that consumers are appropriately protected.

"By publishing these initial thoughts we want to make sure that the industry knows exactly what we’re looking into, and consumers have a clearer idea of some of the potential risks."

As part of its forthcoming review, the FCA will be looking into whether providers of mobile banking services ensure their products and services are secure, reliable and straightforward to use. To help firms achieve this, the FCA has set out areas of potential risk that should be at the forefront of their considerations:

  • Fraud – the potential risk that fraudulent access to mobile banking accounts could result in customers being unable to access their money or make payments, resulting in financial loss, inconvenience and stress.
  • Security – the potential risk of consumers receiving malware or a virus when downloading a mobile banking application.
  • Technology risk/ interruption to service – the potential risk of a systems failure or an IT problem preventing consumers from accessing their accounts.
  • Consumer awareness and understanding – the potential risk that while services are new and consumers are less familiar with using them, it is more likely that payments will be made in error, such as paying the wrong person or paying an incorrect amount.
  • Anti-money laundering systems and controls – the potential risk that mobile banking is used for the facilitation of money laundering activities, particularly where a mobile payment service is not linked to the customer’s current account and there aren’t additional checks to verify the identity of the payee and recipient.

Consumers may wish to consider the following common sense areas when using a mobile banking service:

  • Whether they are taking steps to reduce the risk of fraud, such as making sure that should they lose their phone, others can’t easily gain access to their account.
  • Being careful not to enter incorrect account details when making payments. This is made more likely as a result of smaller keypads and because consumers may be making payments at unusual times.
  • That their phone is sufficiently protected against the possibility of downloading malware (malicious software) or viruses when loading a mobile banking product.

Notes for editors

  1. The FCA’s preliminary findings on mobile banking.
  2. On the 1 April 2013 the Financial Conduct Authority (FCA) became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
  3. The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
  4. Find out more information about the FCA, as well as how it is different to the PRA.