FSA asks banks to help consumers protect against online fraud

FSA asks banks to help consumers protect against online fraud

	Published : Tue, 24 Jan 2006 09:00 By : Richard Owen Print this Story

LONDON: Britain's City watchdog the Financial Services Authority told the banks to help consumers protect themselves against online fraud, as research has shown that consumer confidence in internet banking is waning.

The FSA, which carried out a survey recently, found that internet banking users were extremely concerned about possible risks of fraud. The survey, which covered 1,508 bank customers, is part of the FSA's annual risk outlook report, which is due for release Wednesday. The FSA feels consumers should also educate themselves on the importance of security while using online banking.

APACS, the U.K. trade association for payment institutions, has revealed that an amount of 14.5 million pounds was lost in internet banking frauds during January-June 2005 alone, against 4 million pounds during the same period in 2004.

Almost 95 per cent of the people surveyed by the FSA felt that banks should take some minimum responsibility for ensuring security and 45 per cent said banks should take full responsibility.

The study also found that 5 per cent of online bankers have no security software installed on their PCs at all. Most common reasons cited by the consumers include high cost of such systems, that such systems are not required and inability to understand the systems.

The voluntary Banking Code, which many banks adopt as par of their terms and conditions, provide for the users to use up-to-date anti-virus and spyware software and personal firewall.

Philip Robinson, the FSA's financial crime sector leader, said if consumers were asked to foot the bill for Internet banking fraud losses, they are likely to stop using the facility. "Most consumers recognize they have some responsibility for security but they are not necessarily following this obligation through."

The research showed that if banks made consumers fully liable for protecting against losses, 77 per cent of users would stop using the online service.

Accepting that both consumers and the banks have already taken some steps to introduce measures to protect themselves when carrying out an online payment, the regulator is not sure whether their initiatives "are effective in maintaining confidence".