Banks should not refund all fraud victims to stop public being careless, police chief claims

Banks should not guarantee refunds for all fraud victims to encourage the public to be less careless, a police chief has claimed.

Commander Karen Baxter, the national coordinator for economic crime at the City of London police, suggested there should be “consequences for extremely irresponsible behaviour” if people ignore safety advice.

Her intervention comes just days before a voluntary code of practice offering greater protection against fraud is adopted by major banks including Barclays, HSBC and TSB.

The new rules will mean customers duped into transferring money to scammers posing as trusted parties - known as “push payment” fraud - will be covered for their losses.

While most banks are expected to ask customers to demonstrate they took reasonable care before giving refunds, TSB is to offer a “fraud guarantee” to all victims.

This allows any customer who has been scammed - even one deemed negligent - to get their money back, except in instances where guidance has been repeatedly ignored.

Ms Baxter expressed scepticism of the move, claiming a greater degree of “personal responsibility” was needed to stop the public growing complacent about fraud.

She told The Sunday Times: “If we are not diligent around money and the economy, we all end up paying for it. I’m not sure that’s a good message.”

Previously, banks have not always refunded customers who fall victim to push payment scams, as they authorised the transfer of money to the criminal themselves.

Around £1.2 billion was stolen through fraud last year, including £354 million through authorised push payments, according to banking trade body UK Finance.

Ms Baxter said she welcomed to code, but indicated a guaranteed refund policy was not “encouraging the best responsible behaviour”.

She added: “When people are being offered things that are too good to be true, things that they are advised against doing but they still go ahead, I think we have to have some really difficult conversations.”

TSB’s offer of greater protection against fraud follows a high-profile IT meltdown suffered last year, which saw fraudsters successfully target customers who had been locked out of their online account.

A spokesman for the bank said: "We know our customers never want to become victims of fraud and they want us to help fight back against this type of crime.

“Prevention is absolutely key to tackling fraud so that’s why we share our fraud prevention knowledge, face-to-face in communities right across the UK as well as through digital channels.”