With digital transactions increasingly becoming the norm, the importance of safeguarding consumers against fraud has never been more critical. Recognising the ever-growing threat of fraud, the Financial Conduct Authority (FCA) has conducted a comprehensive review, urging financial firms to bolster their anti-fraud systems and improve their support for victims. In this blog, we consider the key findings of the FCA’s review, shedding light on the pressing need for enhanced vigilance and improved customer support in the fight against fraud.
Fighting the surge in APP fraud
The review highlights the alarming surge in authorised push payment (APP) fraud cases. In the first half of 2023, over 116,000 individuals reported falling victim to this type of fraud. APP fraud typically involves a victim being tricked into sending money to a fraudster who masquerades as a legitimate payee. The implications of this are not only financial but also emotional and psychological, underscoring the urgency of addressing this issue.
Key findings of the FCA review
The FCA’s review uncovered several crucial findings:
- Strengthening Fraud Detection Systems: The review emphasised the need for financial firms to enhance their systems designed to detect and prevent fraud. It is evident that with the evolution of fraud methods, robust frameworks are essential to stay one step ahead of fraudsters.
- Consumer-Centric Approach: A significant concern raised in the review is the insufficient focus on delivering good consumer outcomes in many financial institutions. While profits are vital, customer protection and satisfaction should be paramount.
- Improved Support for Fraud Victims: Some firms have fallen short in providing adequate support to victims of fraud.
- Efficient Complaint Handling: Complaints related to fraud were often mishandled, with slow response times and unclear, accusatory language in decision letters. Swift, empathetic, and clear complaint handling is crucial.
- Considering Customer Vulnerability: Financial institutions need to consider the characteristics of customer vulnerability when making decisions about fraud claims and complaints. Vulnerable customers may require more extensive support and guidance.
The role of the Consumer Duty
The FCA, in line with its Consumer Duty initiative, stresses that firms must ensure consistently good consumer outcomes. This extends beyond fraud prevention to include the quality of customer support and complaint handling. Firms are urged to use the findings of the review to enhance their anti-fraud measures and the support they offer to victims of fraud.
Firms should also consider the findings from the FCA’s recent publication Proceeds of fraud – Detecting and preventing money mules, which reviewed payment account providers’ systems and controls against money mules accounts.
How Neopay can help
Neopay’s Virtual Compliance Service and financial crime audits can assist financial institutions in bolstering their compliance frameworks, thus fostering a more secure and customer-centric environment. Our compliance audits provide a thorough evaluation of a firm’s operations, highlighting areas that require improvement or enhancement. By conducting meticulous audits, financial institutions can identify weaknesses in their financial crime prevention systems and controls, as well as other regulatory aspects such as complaint handling and other Consumer Duty outcomes. This, in turn, enables them to fortify their frameworks, ensuring a more robust defence against financial crime and other business risks.
Contact our team today to find out more about how our tailored solutions can support your business.