TSB set to refund all fraud victims

TSB has promised to protect its 5.2 million customers if they are innocent victims of a scam.

The bank's new "fraud refund guarantee" covers all transactional fraud losses, including cases where a customer is tricked into authorising payments to fraudsters.

The guarantee applies to losses incurred by new and existing customers on or after Sunday 14 April.

The move, a first in the UK banking industry, will put customers at the heart of a new strategy to tackle the fast-growing problem of bank fraud in the digital age.

In last April's online IT banking fiasco, thousands of customers locked out of their TSB accounts were then exploited by scammers, underlining the growing sophistication of fraudsters.

The bank is likely to commit to protecting against all types of transactional fraud losses up to a cap of £1m, including cases where TSB customers have been tricked into authorising payments to fraudsters.

Consumers elsewhere are usually refunded if a fraudster takes money from their account without them knowing but if they authorise the payment, they can struggle to get their money back.

According to the trade body UK Finance, more than £1.2bn was stolen by criminals committing bank fraud last year.  Of that £354m was lost last year through push payment scams, where a person is tricked into thinking they are transferring money to a legitimate organisation.

A voluntary code of conduct for banks comes into force at the end of May and will guarantee refunds for "innocent" victims, although TSB's new guarantee is likely to go further than this.

TSB executive chairman Richard Meddings said the bank wanted to provide "peace of mind" for customers.

He added: "The vast majority of fraud claims across UK banking are from innocent victims of fraud who have been targeted by criminals and organised gangs.

"However, all too often these customers must fight to be refunded and are not treated as victims of crime."

The guarantee will not be applied to customers who abuse it - for example, by committing fraud on their own account or by repeatedly ignoring safety advice and customers will still need to report the fraud to the bank, which will still investigate the claim.