Banks across the UK have been granted the ability to delay payments for up to four days, allowing them to have more time to investigate fraudulent transactions. In a bid to safeguard consumers against scammers, the UK Government provided banks across the region with the ability to pause and investigate payments that are suspected of being fraudulent.

The new proposed laws are set to extend the time that payments can be delayed by 72 hours in case there is a reasonable foundation for suspecting a transaction is fraudulent and more time is required for the financial institution to examine it. Before this announcement, banks could only process or refuse a payment by the end of the next business day. The proposed new regulations are planned to come into force at the end of October 2024, which is later than originally planned. The previous government's draft legislation offered financial institutions the capabilities by 7 October 2024, but now they are set to take effect from the end of the month.

How will the four-day hold support the UK’s fight against fraud When commenting on the announcement, representatives underlined that considering the increased risk of fraud and the negative impact it has on both the communities and the economy, the government plans to protect individuals by giving banks more time to investigate suspicious payments. Also, it is mentioned that this represents a positive step in the fight against fraud while not affecting the vast majority of everyday payments. On the other hand, these measures must be leveraged in a careful and targeted way and financial companies, regardless of size, should also ensure they share intelligence and collaborate with the police and other authorities to close down accounts used for fraud. Furthermore, customers are set to be informed by financial institutions if their payment is delayed due to the transactions being suspected as fraudulent.

In addition, banks will need to explain what the customer needs to do to unblock the payment. By imposing a need for evidence to trigger a delay, both individuals and businesses will be protected against unnecessary payment delays. Also, financial institutions will need to compensate customers for any interest or late payment fees they incur due to delays.

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