New Fraud Refund Rules and ISA Changes

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Hello, welcome to this Moneybox podcast. Is the ISA still your inflexible friend? The government has relaxed the rules about opening and moving tax-free ISAs, but are providers ready for the changes? The Department for Work and Pensions does a U-turn into a North Sea skinny-dipping row. And paying monthly for your car insurance can make the cost even higher than it already is. But first, four out of ten crimes are...

fraud. It's the crime you're most likely to experience but if you do, how you're treated and whether your stolen money is refunded can depend on which financial firm you trust your money with. As you might have heard in the news bulletin, Moneybox listener Carol had £80,000 stolen in the autumn of 2022. It was an authorised push payment, or APP fraud, where she was lied to and manipulated by criminals who then...

compromised and took control of her bank accounts. Initially, it was a huge trauma. I was shocked for about four days. I didn't really feel anything. things started to dawn on me. I became incredibly cross and I was thinking about it all the time. I couldn't sleep at night. I felt as though, in fact, it was my fault after a while.

that I was too stupid, that I shouldn't have been fooled by... They were incredibly clever, the scammers. Must have been a whole team of them. Well, Moneybox reporter Dan Whitworth has been investigating. What happened, Dan? Well, Carroll's money was stolen from two accounts, nearly £17,000 from the bank Santander and about £63,000 from a company called Tide, which is not a bank, but what's known as an electronic money institution or...

Now, some of the biggest and most well-known EMIs, for example, are companies like Revolut and Wise. Now, EMIs are regulated by the Financial Conduct Authority, but do not have banking licenses, and so are not part of the Financial Services Compensation Scheme, which guarantees up to £85,000 of customers' money, should the company... go bust and in Carol's case there was a stark difference in how they responded to the fraud.

Carol told me Santander refunded her money within 24 hours and apologised. Tide, on the other hand, took six weeks before it told Carol the only money they'd been able to recover was £13.10, closed the case and said... If she wanted to take her complaint any further, she could go to the Financial Ombudsman Service or FOS. Hang on a minute, Dan. Only £13.10 out of 63,000.

Exactly. Now, two months later, it did recover another £20,000, but Tide refused to refund the missing £43,000. So, Carol took her case to Foz, and after more than a year of fighting...

Tide was ordered to refund that remaining money plus thousands of pounds in interest after the financial ombudsman ruled on the case entirely in Carol's favour. When I got the... email from the financial ombudsman finding in my favor that i would get everything back plus eight percent interest over 18 months which is about six thousand pounds i almost fell off my chair I was so... Victory was sweet.

Well, new regulations come into force in less than six months and will require electronic money institutions to raise standards when it comes to tackling fraud and refunding victims. They will be mandatory. They'll cover the vast majority of author... push payment fraud cases in the UK and the financial regulator behind them is warning EMIs to make sure their houses are in order ahead of the change. And why are the rules being changed?

Well, there's already a voluntary code in place, which most high street banks are signed up to, which essentially, I suppose, Paul, incentivise banks to improve fraud prevention by holding them liable for most... customer losses, though EMIs are not signed up to that code. But these new regulations from the payment systems regulator, known as the mandatory reimbursement requirement, well, they go much, much further.

for both banks and EMIs. Claire Simpson is from the watchdog. We think this is a really, really significant step in both protecting customers from becoming victims of fraud in the first place. by making sure that banks are incentivized to protect their own customers, but also to ensure that when customers do become a victim of fraud.

that they are properly reimbursed in all but very exceptional circumstances. And this week, the payment systems regulator has been talking to me about what it calls an equivalence of service. And that means that all victims of fraud are treated the same regardless. of where they keep their money because at the moment that watchdog Claire Simpson says there's a massive difference between how banks and EMIs treat victims. Here's Claire again.

So we see a significant difference at the moment between those larger banks that are already reimbursing those customers and some of the newer non-bank entrants into the market. Now, what we want to see is those really exciting, innovative offerings that those firms have for customers being balanced against the right protection against fraud. And we think that although there are no obligations. on them up until this point to do so.

These new requirements will create a much more level playing field for both firms and customers. So Dan, the new rules begin in less than six months. What changes will they make? OK, so they come into force on October the 7th. They'll cover nearly... all payments made by individuals in the UK except international ones and those involving cryptocurrency. There'll be a limit of £415,000 that can be refunded and that will be split between sending and receiving

And there'll be a small excess of around £100 as well. Crucially, the regulator expects refund rates to hit 90% because the new rules will drastically reduce any ambiguity around refunds. and the grounds on which firms can reject claims. And finally, Dan, what did Tide have to say about Carol's case? Well, it wanted to apologise to Carol for the stress she suffered, said it's always enhancing its anti-fraud systems and has further improved its fraud prevention capabilities since her case.

UK Finance, which speaks for hundreds of financial firms, said, different firms will be at different stages, but everyone's working hard to be ready. Carrying on, we need to continue the focus on stopping fraud in the first place and other sectors who bear no cost of... reimbursement need to do much more to stop the fraud that's starting on their platforms and networks and there Paul they're talking about communication and tech companies.

Thanks, Dan. Well, with me in the studio is Catherine Westmore, fraud and financial crime expert at the Royal United Services Institute, RUSI. Catherine Westmore, how much of a difference will these new regulations really make to victims of these kind of frauds? I think they're hugely significant and the UK is really blazing a trail here with these new requirements. As Dan says, most victims of fraud should get their money back in 48 hours, which is...

quite a change for most victims of fraud at the moment. There will be some small exceptions but we should get better and more consistent outcomes. And at the moment what kind of difference is there in refunds between banks and these electronic money institutions, EMIs. So many high street banks have been part of this voluntary system for a few years and we've seen refund rates of around 60%.

payment firms, electronic money institutions or EMIs have had much lower rates and I've spoken to many victims who've really had to fight hard to get their money back. Why are they so behind? Why are they so different from banks? I think one of the core differences is that many of these EMIs are new to the market and they've really prioritised customer acquisition and growth over the last few years.

And as a result, their anti-fraud controls and systems are still really playing catch up. Yes, I mean, there are millions of people who use them, aren't there? How do you tell the difference, though? I mean, they advertise things like current accounts, manage your money. From the adverts, you wouldn't know they weren't banks. How do you tell which is a bank and which is an EMI?

That's absolutely true and it took me an embarrassingly long time to work out the difference. But if you go to a firm's website and scroll down to the bottom, in the very small print at the bottom of the website, it should say whether they're authorised as a bank. or an electronic money institution.

You could always also ask them or Google and hopefully get the right answer. Yes, I mean, if you ask them, they can't say we're a bank, can we? That's a bit of a clue to it. Will it be then more difficult? Because they've done so little so far on the whole, will it be more difficult? for the EMIs to follow these regulations because banks have been steadily improving? I think it will. I think there are a lot of challenges to implementing as we've heard from UK Finance.

And there's still a lot of work to do, particularly in terms of investing in anti-fraud controls at some of these EMIs to stop fraud from happening in the first place. Yes, I mean, the idea always has been, isn't it, that if you make the bank or the EMI...

refund everyone in full, they'll really get down to making sure they've got these controls. Do you think they've still got a lot of work to make sure they have? I think it's certainly my experience talking from people in the industry is that They fear that some of these electronic money institutions are not going to be ready for October and it's going to take a really, really long time for actually consumers to...

get the outcomes that they need and for victims to get their money back. Yeah, so that's going to be difficult, isn't it? Because consumers will have these rights. What happens if they're not refunded? What can they do? So as... currently happens, if they're not refunded, they can escalate the complaint within the institution, within the EMI, and eventually, if they don't get a satisfactory outcome, refer it to the FOS. Yes, and I suppose the regulator will be looking at this very carefully.

We get contacted about frauds every week. I mean, just this week we heard about a £60,000 fraud, another one. New rules were going to begin this month, weren't they? Now they've been put off till October the 7th. Millions, tens of millions of pounds will be stolen between now and then. Why the delay? I think that delay is primarily a practical one in that firms just were not ready for the April deadline. So they convinced the PSR to push it back for six months.

Yes, so we'll have to hope they're ready for the 1 of October the 7th. Catherine Messmore of Roosie, thanks very much for talking to us. ISAs.

Individual savings accounts are tax-free. There's no tax on the interest, the dividends or the growth. And the Chancellor hoped that from this month they'd be even more attractive after, in his budget, he scrapped some of the rules about what you can or can't do. The changes were intended to help savers like John in Clackmannenshire. My question is, can I have more than one ISA? For example, one with easy access, but maybe a slightly lower interest rate.

that I keep for home emergencies and another one for a fixed term with a higher interest rate for money that I don't need immediately. Well, the answer, John, as I understand it, might be yes, but it depends. With us is Anna Bowes. She's the founder of the Savings Comparison website, savingschampion.co.uk, and she can explain all this. Anna Bose, what should John be able to do now that he couldn't do last year? Can he open two different ICAs?

Well, he should be able to. And in fact, without going too much, he could have done so last year, but with the same provider. But now the new rules state that you should be able to open, for example, let's stick with cash Isis, two different cash Isis with two different...

providers this tax year the answer is some people will allow some banks and building sites will allow you to do that and others will not so I'm afraid it's still down to the provider whether they're going to adopt these new rules And certainly it's a little bit slow with some providers getting started with this because they haven't had that long.

No, and we've had a number of emails. Chris said he wants to transfer money into two cash ISAs, but he wasn't allowed to. These were ISAs he already had. And Duncan's emailed about changes. He had to say, I won't be subscribing to another ISA. In fact, that rule doesn't apply anymore, not legally anyway. So is it a question of getting their systems up to date with the new rules? Yeah, I think in some cases it certainly is. There are application processes that have to be changed.

Because as you say, they'll ask, have you already subscribed to an ISA? And that was to safeguard people from taking out two ISAs and falling foul of the rules last tax year. But of course, those rules are changing for this tax year. So there's going to be some system changes needed, which we all know cannot happen quickly. And also, as I say, it will be down to the providers, what they focus on, whether they're going to...

accept those new rules and make that total flexibility available. So they're under no obligation then if they decide, well, we're not going to do this, they don't have to. They don't have to. The only rule change that is a requirement, an eligibility requirement, is the age. And so at the last tax year, 16 and 17-year-olds were able to open a cash ISA from the new tax year. That is no longer allowed.

They have to be 18 to open a cash ISA. Yeah, so they have to open a junior ISA instead. Another change, the Chancellor said, but people can make partial transfers. So if you see a better deal during the tax year, you can move some money from your ISA. to another ISA, that's another flexibility because in the past you had to move the whole lot or nothing. Yeah, again, the rules are so complicated. In the past, you could...

do a partial transfer of a previous tax year's allowance, but you had to move entirely your current tax year's allowance. So now, in theory, you should be able to do a partial transfer of any of your ISAs, but again, not all providers... are allowing that at the moment or can do that so in a way the rules are just as complicated now even though there's potentially more flexibility coming down the line at the moment you do have to simply check with any provider you're thinking of

an ISA with and finding out what they're allowing and what they're not allowing so that you have the flexibility that you hope to have. Yes, so you'll have to check yourself with your ISA or with your provider or a new provider.

put these details on your website because you already have quite a few we do and it does make the notes a lot longer and obviously we we'll do whatever we can to support savers that's the purpose of the website uh we are going through a process at the moment as well of trying to ensure that we know.

what these providers are, can and can't do. And we, at the moment, try and show these old flexible ISA rules and their old portfolio, what we call portfolio ISA rules, which means you can open two. So yes, we intend to have all of that information available. to people as well when we know what they are. Right. A big change for all of you. Anna Bose of Savings Champion, thanks. And we'll be keeping our eye on just how flexible our friendly Isis are.

Everybody strip off, get your kit off Everybody strip, everybody strip Everybody strip at the skinny dip Well, if you remember that song, you'll remember Jackie Higginson from Sunderland, who runs the annual... North East skinny dip. Every September, more than a thousand people go down to the beach at dawn and plunge...

naked into the freezing North Sea, all to raise money for the mental health charity Mind. Now, Jack is one of many self-employed people being forced to move from a benefit called tax credits to another one, universal credit. But when she did the... Department for Work and Pensions said all the money she collected for mind would count as her income. And that...

would stop her universal credit in those fundraising months. We raised it with the Department for Work and Pensions last month. It told us it was looking into her case. I asked Jackie for an update. First of all, I heard that... my work coach had been changed and then I heard that my case manager had been changed and all of these things made me quite nervous because I wasn't sure what those things meant and then I got a phone call directly from my new work coach.

And she informed me quite directly that a decision had been made. I no longer had to declare the money that I raised for charity as my personal income, only the money that I paid myself. as a salary. And what does it mean to you in terms of this year's event? Because presumably you're starting to organise September's skinny dip already. Yeah, that's right. I was holding off, setting up the ticketing system. Oh gosh, it's just...

such a huge relief that I can now put that behind me and focus and put all my energies back into organizing the event and raising money for mental health. And you say put your energies into the event. You've used a lot of energy trying to get this sorted out, haven't you? Yes, I did put a lot of effort into it. Initially, I panicked. To be honest, I think the team at Moneybox should take all the credits because you waved a magic wand and fixed this problem for me. So thank you.

Jackie Higginson with the Moneybox effect, or maybe the Moneybox magic wand. And that song was written and performed by sisters Isabella and Gabriel Warburton-Brown. How do you pay for your car insurance? If you have a monthly direct debit, you could be paying a...

A lot more for your policy than if you pay it all at once. New research from the consumer advice organisation WITCH found the average interest rate charged for paying monthly, the APR, was 23%. The highest was nearly... Only two insurers charged nothing extra for paying monthly, and that was out of 29 insurance providers who responded. Ten of them refused to answer at all. Our reporter, Joe Krasner, spoke to people in Liverpool City Centre.

about how they paid for their car insurance. I pay annually because it's cheaper doing it that way. Do you know how much cheaper it is? I think it works out about £20 a year cheaper. I pay annually as well. Because I just want to get it over and done with. And it is cheaper. I pay my monthly to spread the cost over the year because it's quite a big sum. Not huge compared to other people's cars, but just to spread the cost. And why do you pay monthly? The same to spread the cost.

So do you think the charges are the same whether you pay it monthly or annually? I think I do pay extra to pay it monthly, but I probably just at the time didn't have that money really. Same, I just didn't have a few hundred pounds at the time, so I had to spread it out.

Yeah, there's people in Liverpool there. Now, on Wednesday, Parliament's Treasury Select Committee held an inquiry looking at what the insurance industry is doing to keep premiums affordable. Charlotte Clarke is the Director of Regulation at the Association of British Insurance. It's very hard, I think, to kind of sit here and say 40% feels reasonable. Then she added...

But what we've got to try and make sure we don't do is that in kind of saying, well, actually, we can make these cheaper, we suddenly means that insurance is less available to certain people because certain companies won't. are not willing to take on those people as a risk because you can't make money from them. Charlotte Clarke talking to MPs. Now listening to All That is Harry Kind. He's consumer expert at Which?

Harry Kind, while you did this research, why are so many insurers charging customers more to pay monthly? One was charging nearly 40% interest. It's an incredible rate of interest, considering that this is a really low cost loan, if you can even call it that, to people who, if they fail to pay on a monthly basis, they don't pay one month, then.

the best the insurance company can do is just cancel their insurance for the rest of the year. It's not a very risky proposition for them at all. And so when we're looking at fees of 40%, far beyond what you get from pretty much even the worst credit cards you are um it really doesn't seem like it's meeting the fca challenge of

being fair value for consumers. Yes, of course, this is something fairly new, isn't it? The fair value. And there is even a fair value assessment that they have to go through, isn't there? What does that involve? Why doesn't that solve the problem?

Well, quite. So a lot of this is fairly new. The consumer duty brought in in the last year or so has really strengthened consumers' positions. But the FCA, the Financial Conduct Authority, who's regulated this, they need to really up their game and make sure.

that there is a proper assessment so that these extreme interest rates are indeed reasonable and providing fair value, particularly when we know that there are plenty of insurers, well, I mean, at least two, who are able to make, you know, have 0% interest so that they're

is no penalty for being unable to stump up a thousand pounds worth of cash for a year's worth of insurance rather than paying monthly. And we think that what the FCA could do is make sure that there's a league table they publish that kind of highlights the worst offenders. and take punishment on those who we think are charging an unfairly high amount. Yes, I mean, some people might say, why do people have to pay?

extra at all because, you know, you go online usually, you get a price for the premium, you think, OK, it's a lot of money, but that's what it is, I can't get any better. And then you'll charge more. Surely that's unfair in itself, isn't it? Yeah, and you could make an argument that, look, if someone wants to pay in advance, that there should be some kind of incentive for that, for paying up that cash.

At the same time, what we're seeing is that the prices remain kind of higher for paying monthly rather than lower for paying upfront. It's of zero risk. And what it ends up being is a tax on the poor. who can't afford to put up £1,000 for an insurance product, which is only being delivered to them monthly anyway. And so it really is an unfair system like that.

Yes, and of course, with car insurance anyway, because I know this happens in home insurance as well, but in car insurance, you actually have to have it, don't you? It's a legal requirement if you want to drive a car. You say that you want... The Financial Conduct Authority get tougher and to draw up a list. It never really has done that, has it? Do you think it's realistic to expect it to have a list?

I think so. I think when we've got the consumer duty that's been brought in, of course, there's going to be a that's such a broad duty that is being applied to so many different financial institutions. Of course, the FCA is going to have to, you know, work really hard to find out.

best way of assessing fairness in all of these different industries. But we do think that they have been positive about this and have spoken out in favour of cracking down on these unfair charges. Yes, and I suppose the list would at least help people.

moment it is quite difficult to know isn't it before it actually happens to you anyway harry kind from which thank you very much well there's no need to borrow money to listen to the money box podcast it's free and you can listen free to the live broadcast too saturdays at noon On Radio 4.

England, in other words, are you a leaseholder who doesn't own the ground your home stands on? Will new reforms make it better? And why isn't it just being abolished? Catch it live or catch up on BBC Sounds. You help set our agenda by emailing us. Moneybox at bbc.co.uk. We do read them all. You might get on the show. In this podcast, the reporters were Dan Whitworth and Joe Krasner, researcher Sandra Hardiel, studio manager Becky Marcus, our editor.

was Beatrice Pickup. I'm Paul Lewis and this was a BBC News money and work production for BBC Sounds. I'm Kivita Puri and in 3 million from BBC Radio 4... I hear extraordinary eyewitness accounts that tell the story for the first time of the Bengal famine which happened in British India in the middle of the Second World War. At least three million people died.

It's one of the largest losses of civilian life on the Allied side. And there isn't a museum, a memorial, or even a plaque to those who died. How can the memory of three million people just disappear? 80 years on, I track down first-hand accounts and make new discoveries and hear remarkable stories and explore why remembrance is so complicated in Britain, India and Bangladesh. Listen to 3 Million on BBC Sounds. Well, that's a smarter way to live. Get the smarter home system that just gets you