Customers Will Soon Pay for Security Flaws, UK Banks Propose

Banks are currently liable for their customers losses due to online fraud. This could soon change with a collaboration between the Bank of England and the U.K government (involving GCHQ, the Government Communication HQ).

The proposals will absolve the banks of reimbursement for fraud if it can be proved that the customer was negligent in their system/browsing configurations. This has been revealed by the London Financial Times who also report the heavy criticism from to the proposals by consumer groups.

Bad browsers will cost customers with four stage plan
The proposed plan has four stages that are designed to make the online customer take responsibility for secure browsing. The first interaction will be a scan to detect vulnerabilities caused by browsers that are not current; antivirus that is not current with signatures, and any potentially exploitable old apps/programs. Users will be warned to act on anything of concern, though can continue to use the system.

  • If action is not taken regarding supposed weaknesses, the banks will block the customer until remedial action is taken.
  • If action is still not taken, the bank could block the customer’s Internet service provider under phase three.
  • The fourth phase is is to deny the user a refund should they fall victim to online fraud after the warnings were issued.

Logical law-making, or an obfuscation of financial duty?
Of course, customers should take responsibility, though given the history of English banking and the scandals/inefficiency (like the Northern Rock episode), this proposal has caused much cynicism in discussion. The Times write, ‘Bankers are nervous of being seen to be penalise customers, given the sector’s tarnished reputation following the financial crisis and the multiple scandals that have emerged in its aftermath.’

Certain commentators think that this plan makes sense, though. It’s the user’s choice if they browse unsafely and leave themselves open to compromise. Though this plan may also be a further opportunity for the financial institutions to cover their proverbial behinds if they make a future mistake regarding their security – or our cash.

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