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Fraudsters are testing out the security of the government’s seven-day current account switching service by trying to set up current accounts using stolen ID.
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The service, introduced by the Banking Commission, is aimed at simplifying and speeding up the process of changing bank account providers for consumers, small businesses and charities. While previously it would take up to 30 days to switch accounts, it can now be done in just a week.
An IT platform was built by Vocalink to support the service with CGI overseeing the overall project.
The latest figures show that from 1 April 2014 to 31 March 2015, 1.14 million account switches took place, compared with 1.06 million in the same period a year earlier.
But research from Experian revealed that current accounts are now the most targeted financial product for fraud. It said at least 89 in every 10,000 current account applications is by a fraudster using a stolen ID.
“The trend has come as criminals continue to probe for weaknesses in the seven-day switching system. As well as offering a quick win for fraudsters withdrawing overdraft facilities, current accounts can also offer criminals a stepping stone to apply for a wider range of financial products using stolen details,” said Experian.
Experian UK director of identity and fraud Nick Mothershaw said: “Recent figures from the Payments Council show that there has been a 7% year-on-year rise in current account switching. While fraudsters may be taking the opportunity to test the security of lenders systems, increased detection rates are showing that their systems are clearly holding up.
“It is important for people to take measures to ensure their details remain their own. Knowing what your bank can and cannot ask you for will help you avoid phishing scams. Making sure sensitive mail is shredded is also important. Keeping an eye on your credit report can help you spot any suspicious activity,” he added.
Experian has launched an interactive fraud dashboard which shows fraud rates by financial product as well as regional hotspots.
Read more about seven-day switching service
- Payment Council figures on the number of consumers that switched accounts could indicate the beginning of a new era in UK retail banking
- The IT system that underpins government’s regulation of seven-day bank account switching is being underused
- Current account holders in the UK can now switch banks within seven days following the launch of the Current Account Switch Service