How the banks stole your rights


Let me tell you about the Fraud Trap.

When fraud first began to be a problem for the banks, they had to decide what to do about it. There were many discussions at the highest level over a protracted period. After all of this, The banks reached a consensus on the best action to take. No action at all.

It would be cheaper to stand the losses than to fight the fraud. They also did not want customers to suspect that banks were not safe.

To morons like you and me, it would have seemed obvious where this strategy would lead. What do we know? We’re not highly qualified, highly paid banking persons.

Surprisingly, fraud did not go away. It grew. Now the banks tried reinforcing their systems. It was never going to work; they’d given the crooks a head start. The banks also didn’t have the expertise, or the motivation, of the criminals. Fraud continued to increase.

It increased to such an extent that the banks were helpless in the face of it, and the police were overwhelmed. This brought about another bout of soul-searching. What could be done? Another brilliant strategy emerged.

To stop the police being inundated by babbling customers, only banks would be able to  investigate a banking fraud.

So the new system was born in 2007. Customers could no longer report fraud to the police. This destroyed any hope that the criminals would be pursued, and the money returned. Instead, it was up to banks to investigate, or not, and decide whether to replace funds, or not. We all know how that went.

Would you believe it? Fraud against banks increased at an accelerated rate. Time for a new plan of action.

Changes were made at the beginning of 2013. Customers would now report frauds committed against them to Action Fraud. This whimsically named organisation would not take any action. It would simply record the crime. Only frauds considered important enough  would be investigated by the police.

At first glance, this seems less an abject admission of failure, more an exercise in pragmatism. This is because it’s reasonable to assume that, if a bank is party to an agreement which prevents a fraud from being investigated, it will reimburse the customer. No such luck.

It is entirely at the discretion of individual banks whether a fraud will lead to a replacement of the customer’s funds, or a cry of “Nothing to do with me, guv!” This is because banks are allowed to act as judge and jury in these cases. They will decide if the customer is a victim of crime, or a lying scallywag.

It’s easy to see how the scales are weighted. If a bank finds in a customer’s favour, it will cost it money. Banks are in business to make money. Which decision has the greatest incentive behind it?

You may believe that the Financial Ombudsman Service has a duty to make banks treat their customers fairly. You’ll think this because the FOS says so. Unfortunately, it’s not true. Banks’ whims are sacrosanct.

Thousands of people are caught in this trap every year. The bank will say that the customer’s loss is not actually a banking fraud, and refuse to reimburse. The police will say that it is a banking fraud, and refuse to investigate.

Whatever happened to our rights in Law?


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