Daily Archives: 2008-10-14

Making bank reimbursement statutory

Many of the recommendations of the House of Lords Science and Technology Committee report on Personal Internet Security have been recycled into Conservative Party policy [*] — as announced back in March. So, if you believe the polls, we might see some changes after the next election or, if you’re cynical, even before then as the Government implements opposition policy!

However, one of the Committee recommendations that the Conservatives did not take up was that the law should be changed so that banks become liable for all eBanking and ATM losses — just as they have been liable since 1882 if they honour a forged cheque. Of course, if the banks can prove fraud (for cheques or for the e-equivalents) then the end-user is liable (and should be locked up).

At present the banks will cover end-users under the voluntary Banking Code… so they say that there would be no difference with a statutory regime. This is a little weak as an objection, since if you believe their position it would make no difference either way to them. But, in practice it will make a difference because the voluntary code doesn’t work too well for a minority of people.

Anyway, at present the banks don’t have a lot of political capital and so their views are carrying far less weight. This was particularly clear in last week’s House of Lords debate on “Personal Internet Security”, where Viscount Bridgeman speaking for the Conservatives said:

“I entirely agree with the noble Lord, Lord Broers, that statutory control of the banks in this respect is required and that we cannot rely on the voluntary code.”

which either means he forgot his brief! or that this really is a new party policy. If so then, in my view, it’s very welcome.

[*] the policy document has inexplicably disappeared from the Conservative website, but a Word version is available from Microsoft here.