Banks breaking FSA rules

09 Jan 2010 - A failure to reimburse customers' stolen money

New FSA rules, introduced in November 2009, require banks to reimburse immediately customers who have money taken from their account, unless there is clear evidence of fraud or gross negligence on the customer's part.

However this was not the experience of one Radio 4 Money Box listener, who was mugged at a cash machine one Friday afternoon. An employee of HSBC gave him advice that broke FSA rules. HSBC has subsequently apologised for the mistake and refunded their client the £1,000 stolen and an additional £100 for the inconvenience caused to him.

"If the bank, at the time the complaint is made, has got evidence that the customer behaved in a fraudulent or grossly negligent way, they can refuse to pay, but if they don't have the evidence they have got to make immediate repayment," says Dan Walters, the Financial Services Authority Director responsible for this area.

Currently Mr Walters is undertaking an investigation to assess how well this new FSA rule is being followed. He has asked banks to give the FSA the records of unauthorised transaction complaints since the new regime started last November, with the percentage paid immediately and the percentage paid after investigation. He does not expect to see complaints going to the Financial Ombudsman.

NETconsent View

How can banks ensure their employees adhere to new FSA rules like this one?

Clearly it impossible to undertake face to face training on the frequency that FSA rules are updated. Memos and emails notifying employees of policy changes are easily placed at the bottom of a to do list and even if actioned, the employer has no idea whether it was read or if the employee has understood the FSA rule.

NETconsent Compliance Suite delivers vital policies and procedures direct to employees’ desktops, empowering them to do their roles more effectively. By ensuring that every employee sees and agrees to relevant FSA policies, organisations can minimise risk and improve compliance with constantly evolving legislative and regulatory requirements.