From the end of this month, banks will have new powers to delay and investigate payments that are suspected of being fraudulent, with the aim of helping to protect consumers against scammers. 

The Payment Services (Amendment) Regulations 2024 have been made.  They extend the time that payments can be delayed by 72 hours where a bank has reasonable grounds to suspect a payment is fraudulent and needs more time to investigate. 

According to the government, fraud accounts for over a third of all crime perpetrated in England and Wales, making it the most prevalent form of crime. This has been driven by a growing number of purchase scams and the emergence of so-called “romance scams”, where victims target vulnerable people and trick them into transferring large amounts of money by pretending to be interested in a romantic relationship. 

The new rules aim to help protect people against these types of scams by allowing banks up to an additional 72 hours to investigate suspicious payments. Currently, banks must either process or refuse a payment by the end of the next business day.

Banks who have reasonable grounds to suspect a payment is fraudulent will need to inform customers when a payment is being delayed. They will also need to explain what the customer needs to do to unblock the payment. The need for evidence to trigger a delay aims to help protect people and businesses from unnecessary payment delays. Banks will also be required to compensate customers for any interest or late payment fees they incur if there are delays.

The Regulations come into force on 30 October 2024.