Security? What security?


Why is bank fraud still growing? Perhaps because we have no answer to the genius of the master criminals involved. Perhaps because some banks don’t take their customers’ security as seriously as they claim.

David Elliott recently discovered this for himself. A number of ‘phone contracts were taken out in his name, without his knowledge. The fraudster made no payments, and the ‘phone companies demanded the money from Mr Elliott. He had to deal with around 120 letters of this unpleasant nature.

How could this happen? How did the ‘phone companies know his address? Because Santander Bank had provided the fraudster with an account in the name of Dominic Elliott, using David Elliott’s address.

Mr Elliott is not happy about this. He blames Santander for his difficulties. He believes that the bank should have taken care to verify the address. it’s no surprise that he should think so. Banks have a duty under money laundering regulations to do just that.

Of course, Santander claims that it goes to the utmost lengths to keep it’s customers’ money safe. It may well do so, but it wasn’t very effective in this case, was it? it allowed an account to be opened using a false address.

We shouldn’t single out Santander for criticism. It’s not the only bank to take such a relaxed attitude to security. On the other hand, it’s not typical, either. Some banks go to much greater lengths to protect their customers’ funds. They will ask for proof of identity, even for an existing customer who is simply changing address. There’s a wide range of attitudes to security amongst these organisations.

Fraudsters know all about this discrepancy, and target those banks which cause them the least difficulty. Some combinations of banks are particularly lucrative. Unfortunately. this doesn’t only affect customers of those banks. David Elliott does not bank with Santander.

Even though we can’t escape the incompetence of an organisation which we don’t deal with, we might try to give ourselves the best chance by banking with a company which has a sense of responsibility towards its customers’ funds. How can we tell which banks do best in keeping our accounts secure?

It would be useful to have a standardised approach to preventing bank fraud. The standard should be set at best practice, of course, and not mediocrity. Then we would know that all banks were doing whatever was necessary to reduce the millions of pounds lost to this type of crime.

You’d think that this was already happening, wouldn’t you?



Same old, same old…


All this bank-bashing gets tedious, doesn’t it? it’s difficult to stop doing it, though, when the banks keep on giving us cause.

Look at the way that banks handle complaints: in a six month period, HSBC customers referred 12,429 complaints to the Financial Ombudsman Service. These were complaints that the bank had rejected, because it considered that they had no merit. The Ombudsman found in favour of the customer in 78% of cases.

All of those cases could have been resolved by the bank, if it had had the will. Instead, it was happy for the Ombudsman to do the bank’s complaints-handling for it. How cynical! It’s a powerful indication of the bank’s attitude toward its customers.

HSBC isn’t alone in this. It’s simply standing at the pinnacle of this heartless, grasping industry.

None of this stops banks themselves complaining, of course. They feel particularly hard done by at the moment.

The Financial Conduct Authority is trying to take the first steps in tidying up these shambolic organisations. One of its suggestions is that named managers should be responsible for implementing the necessary changes in their bank’s systems. Oh, horror! How can this be? A manager held responsible! We’ll all be ruined!

Senior managers have duly complained. They will expect to have their complaints heard. They will hope that the FCA will change its mind. How dare they? Would they respond to a customer’s complaint by changing their systems? Fat chance.

Not that these systems aren’t long overdue for an overhaul. We all know that there is a thriving bank fraud sector, because criminals can so easily circumvent the pitiful security of most banks. What isn’t so clear is how big this problem actually is.

If the annual Crime Survey for England and Wales included bank and credit card fraud, the figures would go up by almost 50%, or 4 million cases. That’s an awful lot of crime to leave out of the figures.

I’ll bet that you thought that this sort of theft would already be included. I certainly did. Why is it left out? I could be uncharitable, and suggest that these crimes are kept out of the statistics because the powers-that-be don’t want us to know that banks’ funds are being pumped into criminals’ pockets on an industrial scale.

The Office for National Statistics gives a different explanation, and I’m prepared to believe it:

There are a number of reasons to leave these crimes out of the figures, including the difficulty of knowing who has been robbed. Is it the bank? Is it the customer? It’s just too difficult to be sure.

It’s this lack of clarity that some banks exploit to their profit. If it’s impossible to know who was the victim of the crime, they’ll decide that it’s not the bank. This means that it can avoid reimbursing the customer, who will just have to trot off to the police to see if they can do anything about it.

This is one of the reasons why one bank will make good the losses of a customer who has been defrauded via it’s systems, and another will not. It’s all on a whim. Oh, what power!

So there you have it. As long as the banks remain blind to the results of their actions, or inaction, and indifferent to the well-being of their customers, we’re going to keep on taking them to task.


“Roll up! Roll up! View the giant Hypocrite!”


Let me tell you about the circus and the bank. The troupe is called ‘Circus Uncertainty’, and is based in Bristol. It was founded earlier this year by Joshua Morris.

He wants to work with terminally ill children. He can get grants to fund this endeavour, but the circus must have a business bank account to receive them.

We need a drum-roll here, because Santander Bank is about to enter the ring.

Mr Morris applied to this bank for a business account. At first everything went swimmingly. Smiles all round. Then, after a delay, the bank informed him that it could not accept his business.

After a great deal of evasion, the bank revealed the reason. Its staff had looked at photos on the circus’ website, and disapproved of the female performers’ costumes. There was a ‘moral problem’.

Can you believe it? This is a bank sitting in moral judgement on its customers.

These are the organisations which presided over their staff carrying out fraudulent activity on a grand scale. These are the people who, when they found out that they would be fined, not imprisoned, cried out that it was all too cruel. They protested that if they were to be held to account in this way, the economy would crumble and we would all starve.

Now they see themselves as arbiters of moral and ethical propriety!

it’s interesting to see Santander going to such lengths to ensure that prospective customers meet the proper standards. Banks don’t usually worry about such things. They are content for accounts to be used for money-laundering, or any other criminal activity for that matter. When challenged, they will claim that they can’t possibly vet every customer. Yet here we have just such an event occurring. Curiouser and curiouser!

Santander would not discuss the problem with Mr Morris, at least not until the story appeared in the media. The bank then had a miraculous change of heart and was prepared to offer an account to the circus, because the ‘moral problem’ was based on a misunderstanding. There was no difficulty with the troupe’s behaviour, after all. So the bank still claims the right to make moral judgements.

Mr Morris may take up the offer or, because of his shabby treatment at the hands of Santander, he may give his business to a bank with less exalted standards. Lloyds, perhaps.

Just when we thought that the banks couldn’t do anything more breathtaking, one of them produces this. We are accustomed to their smug justifications of endemic chicanery and criminality, but this is something new. This is something terrifying. The moral well-being of the nation is in the hands of the banks.

You may have seen it coming, but it’s stunned me.


“It’s all your own fault”

bank vault

The banks are keen to tell us that they have changed. They have seen the error of their ways. Everything that they do now is centred on their customers. Billions are to be spent on improving customer experience.

I suppose we should be grateful. It’s been a long time coming, but we can only welcome such a change of heart.

Is it too much to hope that, after this epiphany, they will stop treating customers as fools or criminals?

Trevor Smith had £35,000 taken from his account by fraudsters. He had no involvement in the transactions. His bank allowed someone to change the address on his account, order a new debit card, and go on a spending spree. Large payments were made in London at exactly the same time as Mr Smith was spending moderate amounts at home in Dorset. The bank did not see any problem in this.

His bank has denied all responsibility. It must be the customer’s fault. He must have allowed his personal details to fall into the hands of criminals. No other explanation is possible.

Really? When our money is safeguarded by companies with outdated systems, and a small but determined number of employees who steal from customers or sell their personal details to fraudsters? No other explanation? When a bank’s anti-fraud software thinks that £180,000 for a pizza is a perfectly normal transaction?

It’s no surprise that the bank has chosen to blame its customers. The alternative is to reimburse them for the losses that the bank has allowed to happen. Worse, it might have to do something about its woeful systems.

There’s little chance of this attitude changing. The current conventions encourage it. If there is any suspicion that a bank has let a customer down, there will be a thorough investigation – carried out by the bank. Then the bank will judge whether it is guilty, and if so set its own punishment. Would we tolerate this nonsense anywhere else?

imagine a company selling tinned salmon. The tins are regularly laced with botulism. Should it be left to that company to decide if an offence has been committed?  Would we let it apply any punishment that it though fit?

Until we have a better arrangement, where retail banks take responsibility for the quality of their products, like any other shopkeeper, we will have thousands of customers each year paying the price for the banks’ inadequacies.

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Miracle on the High St.


Staff at a branch of Barclays Bank have managed to do the impossible.

They suspected that a customer was about to become a victim of ‘courier’ fraud. Instead of allowing her to be robbed to teach her not to be so stupid, they delayed the transaction and alerted the police. The customer has lost no money, and an alleged fraudster is in custody.

This is commendable behaviour by the bank workers. The customer should be grateful. I hope that their employer sees it in the same light. The banks have explained at length that it is not their responsibility to protect customers from their own idiocy. They go further: such a thing is against the laws of physics. Even if they could be bothered to intercept these transactions, there is no way to do so. Yet here we have bank staff preventing a crime in progress. The centre cannot hold.

The banks’ cynical inaction is tolerated because of a mistaken but widespread belief that ‘courier’ fraud is targeted at dotty old people who refuse to get to grips with modern technology. Not so. As many of the victims are below 55 as are above it.

For example, Faye Brian is 35. She has lost all of her money to fraudsters. To make matters worse, she is a customer of Santander. Not only will she get no money back, but you can be sure that the bank will have treated like a fool or a criminal, or both. If she had not managed to read the correct newspaper articles, or see the correct television programmes, she would have been unaware of the existence of this class of fraud. Despite Santander’s claims, it makes little effort to inform its customers of these risks. In fact, some of its pompous pronouncements on this topic are not always perfectly aligned with the truth.

You will have noticed that I have not explained what ‘courier’ fraud is. This is because the banks are all agreed that the vast majority of customers know all about this type of crime, so there is no need to warn them.

It’s true that there has been some publicity lately, and more people have now heard of it, but if you are not one of them you have exposed the banks’ falsehood. Faye Brian certainly had no knowledge of this scam.

So there we have a contrast of styles. Workers at one bank look out for their customers’ safety; at another they treat them as stupid cash cows. Which one is the future of UK retail banking?

Pants on fire


Banks aren’t alone in knowing how to kick you when you’re down, but they’re particularly good at it.

The number of people being taken in by ‘vishing’ scams is steadily increasing. How are you likely to be treated when you are robbed in this way?

Let’s use the Nationwide Building Society as an example. I know that it’s not a bank, but if it walks like a bank and quacks like a bank…

A customer services adviser from this organisation told one of its customers that it was her own fault that she had been defrauded. She was old, and she hadn’t watched the One Show when it had warned about ‘vishing’.

You can be sure that she had needed no assistance from Nationwide in feeling stupid and gullible. Frauds of this type are effective enough in producing such feelings.

The banks are skilled at putting the boot into victims of crime, but are strangely confused about their own responsibilities.

They are quick to tell us that it’s not their job to warn their customers about these scams. Plenty of people are ready to agree with them. It’s up to the customers to learn about these matters in the national media and on social networking sites.

This looks like a reasonable stance, but I’m puzzled by this: If it’s nothing to do with the banks, why don’t they stick to their guns? Why do we regularly see statements such as:

‘Nationwide takes fraud very seriously. The society has a dedicated page on our website, regular posts on social media, leaflets in branch and have done targeted mailings to customers. 

‘We have comprehensive systems in place to protect our members. As mentioned above, the society also does a significant amount of work to educate customers about the different types of fraud.

They want to look as if they are protecting us without actually having to do much. They might be good P.R., but these claims are half-truths at best. If these activities were being carried out with any degree of vigour, fraud would be becoming rarer, not more common.

Whatever the banks might be doing in reality, it’s not achieving a great deal. Perhaps it’s not meant to.

Why do I say this? The deeply sympathetic customer services adviser whom we met earlier didn’t say: ‘Haven’t you read our letter?’ or ‘Haven’t you seen the leaflet in branch?’ The question was: ‘Didn’t you see the One Show?’ There was no expectation that the bank’s efforts might have averted the fraud.

If Nationwide had written to this customer, instead of abdicating its responsibilities to the media, the fraud would not have happened.

I don’t want to single out this one employee, or one bank. The attitude is widespread. The chairman of Santander UK, for instance, has expressed the same contradictory ideas: it is up to customers to educate themselves; Santander educates its customers.

He repeats the same claims that we have seen from Nationwide, and adds one of his own: his bank includes warnings about ‘vishing’ frauds on its statements. This is a good idea. It is an efficient way to spread the word. Unfortunately, Santander stopped routinely issuing printed statements some time ago. The claim that he makes is untrue.

We can only imagine the process that led to the chairman of the bank being supplied with information that has no basis in reality. Perhaps we should keep such musings to ourselves.


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“The customer is always right”


piggy bank

How hard does your bank work to keep your money safe? Not as hard as you might hope.

We sign up to regular automatic payments every day. Most of them are direct debits or standing orders. Some of them, though, are in the form of a ‘continuous payment authority’. This is usually charged against a debit or credit card, not a bank account number, and the arrangement carries some risk.

It gives much more flexibility to the company taking your cash, and much less protection to you. In the majority of cases this causes no problem, but if you fall into the clutches of an unscrupulous organisation you could be in real trouble.

You could have large sums of money repeatedly taken out of your account, and have no way of stopping it. ‘Phone calls to the firm go unanswered. Emails bounce back to you. What can you do to stop this company emptying your account?

Perhaps you could ask your bank to stop making the payments. You’d think so, wouldn’t you? The FCA has told the banks that they must obey their customers’ instructions in this situation. Water off a duck’s back.

Your bank will tell you that it is powerless to prevent money being taken out of your account on dubious authority. It’s up to you to do something about it.

Lets look at the other side of this coin. Imagine: you make a mistake when setting up a funds transfer. You dare to suggest that your bank should have seen that the transaction was grossly out of character for the account; it should have been queried. Your bank will tell you that it has no choice. It must blindly follow your instructions.

This is where we enter the alternative reality of retail banking. A statement can be both true and false at the same time. Your bank must always follow your instructions. Your bank need never follow your instructions. It’s quantum finance.

The situation isn’t completely hopeless. After you’ve jumped through a sufficient number of hoops, you’ll be able to turn to the Financial Ombudsman Service. Your bank will then be told to stop the payments and reimburse you.

The banks must have been told this thousands of times. Why haven’t they learned yet? Why is is necessary to go through this process every time?

I understand why banks routinely stall in this way. It’s normally in their interests to delay the moment when they must repay their customers’ money. In this case, though, the longer they prevaricate, the more they’ll have to pay. It doesn’t make sense.

I have a theory. Ignoring their customers’ best interests has become so ingrained for most banks that they can’t break the habit, even when it hurts their profits.





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