With the new legislation coming into effect at the end of October 2024, only time will tell whether the benefits will outweigh the negatives.
New regulations allowing banks to delay payments they suspect may be fraudulent by up to four days will come into effect at the end of this month.
Under these rules, UK banks can now hold any payment for up to 96 hours if they have reasonable grounds to suspect fraud.
This is a change from current procedures, which require payments to be processed or rejected by the next business day.
Saving clients and customers from fraud
Paul Wainwright, from the Forum of Insurance Lawyers‘ fraud sector focus team, commented on the changes, saying, “The counter-fraud community will likely welcome this move since authorised push payment fraud is a major issue in the UK. It was the most common type of fraud last year.”
Fraud accounts for around a third of all crime in England and Wales. The new legislation is the culmination of lobbying my banks for permission to take longer to agree payments.
The new four-day delay period will give banks time to scrutinise unusual spending patterns and investigate.
Negative consequences of the new legislation
However, Wainwright also expressed concerns about how the delay might affect urgent transactions, s