TSB to refund all fraud victims
It marks a step-change away from coverage in limited cirumstances
TSB has announced that it will be refunding all of its banking customers if they are innocent victims of all types of transactional fraud losses as part of its Fraud Refund Guarantee, a UK banking first.
The bank's 5.2 million customers will be protected in all valid claims as of 14 April from unauthorised transactions on their accounts or if they are tricked into authorising payments to fraudulent recipients.
The initiative comes amid the UK's growing problem of bank fraud as criminals devise increasingly sophisticated plans to swindle innocent people out of their money.
"The vast majority of fraud claims across UK banking are from innocent victims of fraud, who have been targeted by criminals and organised gangs," said Richard Meddings, TSB executive chairman. "However, all too often these customers must fight to be refunded and are not treated as victims of crime."
More people are going digital, whether it's just starting to come round to the idea of online banking or going further and switching to a completely digital bank such as Monzo or Starling, one in four Britons fall victim to online fraud in 2018 with a total of 1.2 billion stolen by criminals.
"By promising to compensate customers who fall victim to all types of fraud (including authorised payment fraud), this should further incentivise banks to implement measures to prevent attacks from happening in the first place," said Mark Crichton, senior director, security product management at OneSpan.
Victims of fraud currently aren't protected heavily by banks, especially for personal accounts. Credit card holders are known to receive slightly better fraud protection than others, but TSB said that the announcement "marks a step-change in banking" where customers are protected from all types of third-party fraud.
The news will help to restore customer faith in the bank after its catastrophic IT meltdown in April 2018 following a botched systems upgrade.
The bank revealed earlier this year that the outage which left its customers unable to access their accounts resulted in a 100m loss before tax last year compared to a 162.7m profit the year before.
The outage has cost TSB more than 330 million so far which breaks down to 125 million in customer compensation, 122 million in emergency recruitment, 49 million in fraud and 33.5 million in uncollected fees.
Following the disaster, the bank announced that it would be taking its IT management in-house and change the way it deals with its tech suppliers.
"In the coming months, we will take direct ownership of our banking platform, including direct contractual relationships with the third party technology suppliers," the company said in an announcement, outlining the changes. "At the same time, we also want to build significant new technology capability in TSB in order to allow us to innovate faster."
The bank will appoint Mike Errington as CIO and Carlos Abarca as chief technology innovation officer to ensure its digital banking platform meets compliance regulations.