Financial firms generally treating customers well after unauthorised transactions, says regulator

The regulator found no need for new rules or further industry-wide action after a thematic review of firms' processes for handling claims in relation to unauthorised transactions. However, it urged firms to ensure that they had clear policies in place, particularly in relation to unauthorised transactions made using overdrawn current accounts where the legal requirements are slightly different.

Linda Woodall, the FCA's acting director of supervision for retail and authorisations, praised firms for their "encouraging" performance.

"Consumers have a right to feel confident that if someone takes money from their account without their permission they will get it back," she said. "Our consumer research showed just how distressing unauthorised transactions can be and we are pleased that firms recognise this."

The FCA focused on firms' treatment of customers who had complained about unauthorised payments made from current accounts or credit cards used to carry out regular, day-to-day transactions as part of the review, but said that its conclusions also applied to e-money accounts or savings accounts. In addition, continuous payment authorities (CPAs) set up to take regular payments from a customer's account could potentially become unauthorised transactions if they continued to be taken after the customer requested cancellation, it said.

Unauthorised transactions can occur for a number of reasons, including fraud or theft of a debit or credit card, duplicate payments or the failure of a provider to act on the customer's instructions. Consumers are protected in the event of fraudulent and other unauthorised transactions by provisions in the 2009 Payment Services Regulations and the 1974 Consumer Credit Act, as well as by provisions in the FCA's own handbook for firms in some cases.

According to the regulator's report, firms are generally meeting their legal requirements when firms report unauthorised transactions, and in most cases tended to err on the side of the customer when reviewing claims. For example, there was no evidence of firms consistently rejecting claims because the customer had not complied with prescriptive security requirements in the account terms and conditions. It said that most firms actively monitored decisions, particularly where refunds were declined, to ensure that they were fair and that the most complex cases were generally escalated to the most experienced staff.

Consumer research commissioned by the regulator as part of its review found that consumers were generally aware that they were protected against unauthorised transactions, but that they did not always know how the protections applied and tended to make assumptions about what their basic rights were. They also struggled to remember multiple PINs or passwords, which could sometimes lead to them storing or sharing them.

The number of debit and credit card transactions grew by 1.1% in May to reach just under 1.1 billion, according to the latest figures from the UK Cards Association. The industry body said that this was an ongoing trend driven by the increased use of contactless cards instead of low value cash payments. The average value of a card transaction was £46.92 in May, down by over £1 compared to a year ago, according to the figures.