There’s a fear that new banking powers may lead to unnecessary blocks put on housing transactions.
From the end of this month UK banks will be able to hold payments for up to four days whilst investigations of potential fraud are carried out. The change follows stricter rules on fraud compensation which came into force on this week, meaning that banks must refund scam victims up to £85,000 within five days.
The changes will be brought about by The Payment Services (Amendment) Regulations 2024 which means that when a transaction is flagged as unusual, banks will look at spending patterns, contact the customer, and investigate further before monies are transferred.
An analysis by estate agents’ body Propertymark suggests that the new measures are designed to deter financial scammers, including those who target the property market aiming to con people into transferring their deposit or purchase funds to them.
Scams are becoming increasingly sophisticated, with criminals often posing as lawyers or conveyancers to win customers’ trust and trick them into giving up their cash.
Small and medium-sized businesses, like many estate agencies, are also particularly vulnerable to payment diversion fraud, where the perpetrator targets a specific individual, impersonates others, creates or amends invoices and diverts payments to criminal-controlled bank accounts.
Fraud cases are on the rise, and when they happen it is a serious matter, and undeniably distressing for those affected. However, Propertymark says this may be a sledgehammer to crack a nut, and believes fraudulent transactions represent a tiny percentage of the business.
In the home buying and selling market, it is increasingly common for completion and exchange to happen on the same day, so even a small number of delayed payments could have a large knock-on effect for movers.
UK Finance states that the new regulations are most relevant to investment and romance scams, where a victim is being manipulated, with the power expected to be used sparingly.
Propertymark says it will monitor the implementation and contact stakeholders to share any evidence of unintended consequences.
This article is taken from Introducer Today