Bank Code Change 'Affects Customer Compensation'

A minor modification to the Banking Code could have a major effect on online banking and credit card compensation, the Guardian reports.

Experts have been concerned by changes made to section 12 of the guidelines, announced earlier this year. In the current (2005) edition, customers are advised to use "up-to-date antivirus and spyware software and a personal firewall" on their PCs to protect their internet-accessible bank and credit card accounts. However, the new edition adds that "unless you have acted fraudulently or without reasonable care [ie, by installing antivirus and spyware software] you will not be liable for losses caused by someone else".

Speaking to the newspaper, independent banking analyst Steven Murdoch claims that this signals a shift in who is liable for fraudulent activity on these online accounts to the holder, due to their not taking the "reasonable care" specified in the code. This means that people who have not installed the security features on their PC who then have their credit card web accounts hacked might be less likely to be refunded.

Mr Murdoch commented: "The most likely way the new rules will be applied is that the bank will decide they don't want to refund a customer, and may choose to quote this rule in their reasoning."

Banks lost £22.6 million to online fraud last year.