FCA tells banks not to force customers to use tap-and-go cards

The Financial Conduct Authority (FCA) has told High Street banks not to force customers to use contactless cards amid growing fears of fraud.

MPs had pressured the Financial Conduct Authority to plug a security loophole which allowed criminals to make 'tap-and-go' payments on contactless cards months after they had been cancelled.

The Commons Treasury select committee accused banks of putting customers in an 'unacceptable situation' of being vulnerable to fraud even as they reported the loss or theft of their card.

The chairman of the Financial Conduct Authority, John Griffith-Jones, said in a letter written to the committee, which was published today, that the regulator had been working with banks for better protection of customers.

Measures under consideration included 'removing any onus on customers to identify fraudulent transactions', and working on bolstering banks' systems to 'reduce the likelihood of post-cancellation fraud'.

He added that banks could also make the option of having a non-contactless card 'more visible' if a customer was concerned about the security risks.

Banks typically issue contactless cards automatically on the expiry of a card, or when it was lost or stolen, unless instructed otherwise. However, Barclaycard, Royal Bank of Scotland and NatWest only offered contactless cards, while Santander said customers could opt out of receiving a contactless card when they first applied.

The matter had come to light after consumer help website MoneySavingExpert.com warned that while some accounts are prevented from being raided in this way, in other cases it was left to customers to spot dodgy payments.

The site pointed out that there might be a real risk of fraud going undetected as people who had cancelled their cards might assume they could no longer be used.

Andrew Tyrie, chairman of the Treasury Committee, said: "As things stand, in order to mitigate the risk of fraud, customers are expected to comb through their bank statements months after they have instructed their banks to block their lost or stolen cards. That seems unreasonable. The Treasury Committee has urged the FCA to sort this out.

"So the package of measures to resolve this problem, which the FCA proposes in their letter to the committee, is welcome."