Heads they win. Tails you lose

Most bank employees don’t steal from customers. A significant minority of them do.

It’s the employee who is engaged in criminal activity, not the bank, but I have a question: Do banks have to make it quite so easy for their staff to rob their customers?

Take Nicola Mierau. Before she was sent to prison, she worked as a customer adviser at the Britannia Building Society (now the Co-operative Bank). She advised her customers to open accounts, which she then plundered. It took the building society nine years to spot the problem.

It doesn’t always take that long, of course. Sometimes it only takes several months for a bank to notice that its employees are emptying their customers accounts.

Why does it take so long? Is it because the banks can’t believe that such a thing could happen?

It’s true that the majority of bank workers are honest, but there is a steady stream of cases like this, and the banks should be looking out for them.

More likely, it’s the woeful inadequacy of most banks’ systems that allow these thefts to go un-noticed. Fraudsters thrive by exploiting these creaking, outdated processes. Ross McEwan, CEO of RBS, admitted a few months ago, when apologising for an IT meltdown, that its systems are not fit for purpose.

In the face of such honesty, should we reconsider? Perhaps it’s too much to expect our poor, under-resourced banks to spot sophisticated frauds. It’s unreasonable to think that banks should have the expertise to stem the tide of fraud and theft that causes millions of pounds to leak out of customers’ accounts every year. After all, the banks will make good the losses.

Not quite.

Most victims will get their money back, after an unpleasant tussle with their bank, but there are thousands of customers who will not be reimbursed. Their banks, acting as judge and jury, will decide that it’s their own fault. They will be treated like criminals.  Millions of pounds stolen from customers will not be repaid.

How do the banks justify this refusal to make good their customers losses? Their systems are so secure, robust and  sophisticated that the money could only have been lost by gross negligence or criminality on the part of the customer. They must have shared their log-in details or their PIN, or they are fraudsters themselves. No other conclusion is possible.

These are the same banks that take years to detect theft by their employees. On one hand, they can’t be expected to spot every fraud. On the other, if they haven’t detected a fraud, it didn’t happen.

Bankers may not be unique in being able to believe two mutually exclusive ideas at once, but they’re definitely world champions at it.

 

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