TR15/10: Fair treatment for consumers who suffer unauthorised transactions

We have carried out work to discover whether consumers are being treated fairly in relation to unauthorised transactions.

Why did we carry out this thematic review?

Consumers are protected in the event of fraudulent or other unauthorised transactions by provisions in the Payment Services Regulations 2009 (PSRs), the Consumer Credit Act 1974 (CCA) and, in some cases, our Handbook.

Our work focused on current accounts and credit cards as these are core services used by consumers to undertake regular, day-to-day transactions. It is particularly important that consumer confidence is maintained in the security of everyday banking. To support this, the protections in place must be operating effectively, including the requirement to provide a refund in the event of fraud or other unauthorised transactions.

TR15/10: Fair treatment for consumers who suffer unauthorised transactions (PDF)

Who should read this?

We focused on current accounts and credit cards provided to consumers, but this report should interest all regulated firms offering payment services – including banks, building societies, credit card providers, authorised payment institutions and e-money issuers. Trade bodies representing these firms, as well as organisations that represent consumer interests and individual consumers may also wish to read this report.

What were our findings?

We found that firms are generally meeting their legal requirements and are making a good effort to deliver fair outcomes for their customers. Firms tend to err on the side of the customer when reviewing claims and we did not find evidence of firms declining claims on the basis of customer ‘non-compliance’ with prescriptive security requirements in the terms and conditions.

This is a complex area, particularly for unauthorised transactions made using overdrawn current accounts where there are different legal requirements. We also identified issues with some of the content of account terms and conditions and found some fairly minor problems around how some firms organise their decision making, for example a lack of clear policies for complex cases and a heavy reliance in a small number of firms on experienced staff. Overall, however, firms seem to be trying to balance the need to consider claims on a case-by-case basis with consistent decision making.

The research we commissioned identified that consumers recognise that protections are in place in the event of an unauthorised transaction. But consumers do not always know how the protections apply to them and tend to make assumptions about what their basic rights are. They also face obstacles when remembering multiple PINs (Personal Identification Numbers) and/or passwords in relation to their account(s), which may lead to them storing or sharing them. The research also identified that consumers who have experienced an unauthorised transaction value their provider immediately adopting and maintaining a supportive stance, as well as dealing with their claim promptly.

Commissioned research (PDF)

Technical report (PDF)

What are the next steps?

Relevant firms should consider our findings and how they apply to their own approach to dealing with unauthorised transactions, taking action where needed.