Tyrie slams banks for understating fraud level

Andrew Tyrie, chairman of the Treasury select committee, has written to Barclays, HSBC, Lloyds, the Royal Bank of Scotland and Santander, after the committee heard evidence last month which suggested that figures published by the banks may be understating the level of fraud in the banking system.

Commenting on the correspondence, Mr Tyrie said that the committee was told last month that the amount of fraud reported by banks “may substantially understate the true scale of the problem”.

He added that it would be “extremely concerning” if this were the case.

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Last month, Dr Richard Clayton, a senior researcher in security economics at the University of Cambridge, told the Treasury Committee: “We know the scale of lots of fraud, particularly that touching consumers, because the banks collate this information and break it down by different sorts of fraud, whether or not cards have been lost in the post, whether or not it is ‘card not present’ fraud, whether or not it is online banking fraud, and they publish the figures for how much money is lost, as in they have to recompense consumers for that amount.

“Insiders tell me that the going rate is about twice that amount of money goes walkies out of people’s accounts.”

Mr Tyrie stated: “Any data on fraud levels published by the industry should be as comprehensive as possible.

“The public should be given the best possible information about the risk of fraud, as well as how to avoid it. Banks must be as open as possible with consumers about what this information does and does not cover.

He accepted that Banks might be reticent about disclosing information that could be used by fraudsters, but pointed out that consumers would be even more risk averse with respect to fraud were it the case that a lot more money was being withdrawn from accounts than consumers realise.

“The incentives on banks to clamp down on fraud need to be at least as strong as those on consumers to identify it,” Mr Tyrie added.