Sarah Pennells is a personal finance journalist and the face behind SavvyWoman.co.uk. We think she does a great job at explaining financial subjects in a very clear and accessible manner. You can find her column below where she writes about the latest financial news, and helps you get more from your money.
Will your bank pay out for fraud?
Bank fraud is something that many people fear – and daily headlines don’t help. Sometimes it feels that no matter how careful you are, the fraudsters are one step ahead.
Whether it’s a cold call telling you someone’s trying to steal money, a phishing email trying to trick you into sharing your personal details, a ‘smishing’ text where a fraudster makes a text look like it’s coming from your bank, or a fake Twitter handle that’s masquerading as a bank’s genuine account…there are lots of ways you can be targeted. But will your bank pay out if you’re a victim of fraud? It may be a bit of a grey area.
- If money was taken from your credit card: the most you’ll be liable for is the first £50 of disputed transactions before you told your card provider that your card had been stolen. However, most banks will refund the full amount. The only exception is if you’ve been grossly negligent – something like leaving your card and PIN lying around.
- If money was taken from your debit card: as with credit cards, you could be liable for up to £50 of money stolen before you told your bank about the theft. The bank should pay you back money that’s been stolen unless it thinks you’ve been grossly negligent. If the bank thinks you’ve been negligent it can investigate the fraud before it decides whether or not to pay out
- If you unwittingly pay a fraudster by debit or credit card (for example if you order something online and the website turns out to be operated by fraudsters): the bank will refund the money you’ve paid.
- If you unwittingly pay a fraudster by direct payment (for example, if you pay for something by online or phone banking payment): here you’re not protected at all. Paying by direct payment is the electronic equivalent of paying by cash.
It turns out that banks have different policies when it comes to refunding people who’ve been targeted by fraudsters through scams. For example, if you get a call from someone who says your bank account is being emptied and that you should transfer money to a ‘safe account’. Some banks will refund you and others won’t. But why?
It seems that those banks that refuse will argue that you authorised the transaction and so they have no responsibility to refund you. Those that pay out appear to take the view that you didn’t knowingly agree to the payment, because you thought you were dealing with someone who’s legitimate.
What can you do? If your bank is refusing to refund money that’s been stolen, make a complaint. If you’re unhappy with the bank’s response, contact the free to use Financial Ombudsman Service. Be aware that they deal with a lot of complaints, so don’t expect an instant answer.
Watch out for social media scams
Staying with the fraud theme – research shows that 13% of people aged 25 and said they’d trust an investment offer via social media compared to just 2% of those aged 55 or over. And more than one in five (23%) said that online reviews would make them more likely to trust a company.
Last week it emerged that almost 250 people lost an average of £55,000 each after investing their pension money with a fraudulent company. There are lots of legitimate companies doing business online, and many want to talk to existing and potential customers via social media. But don’t part with any valuable identity details or cash without doing a bit of independent research first.
Who knows about your online accounts?
This isn’t a trick question! Have you told your nearest and dearest about your online accounts? Research shows that almost two thirds of adults haven’t told their family about online accounts, such as bank accounts, credit cards and investment accounts.
Without being too gloomy about it, it could make life very hard for those who have to deal with your affairs after you die. In our increasingly digital world, there may be little evidence of accounts that you have and, without basic information about where to look, your family or friends couldn’t begin to close accounts on your behalf.
SAVVY TIP: We all like to think we’ll live to a ripe old age, but – sadly – that’s not necessarily the case. You don’t have to run around telling everyone where your accounts are, but it’s helpful if your closest family members know where they can find a list of your accounts.
Off sick? What will your employer pay you?
If you managed to escape the festive lurgies that were doing the rounds over Christmas, congratulations! Thousands of people had flu and many more had coughs and colds.
But do you know how you’re covered if you can’t work because you’re ill? Many people believe their employer will pay their salary for several months if they’re too sick to work, according to research by one insurer1. In reality, over four out of ten employers will cut levels of sick pay after two weeks.
One in six firms will only pay your wages if you’re off for four days and after that you’re on statutory sick pay, which currently works out at just £89.35 a week. Gulp! That compares to the average weekly salary of over £500.
To make things worse, your employer may only pay you your salary if you’re off sick if you’ve been working for them for at least 12 months.
I don’t know about you but I’d struggle to survive on less than £90 a week, so here’s what I suggest you do:
- Check what your employer’s policy on sick pay is. Your company’s internal website or HR department should help.
- Look at your own finances and work out how long you’d be able to survive without your salary. Experts often recommend having three months’ salary in a savings account, but we know from statistics that this isn’t realistic for many people. Having said that, any savings are better than none.
- Find out if your employer offers a group income protection policy. Bear with me, just because it has the word ‘protection’ in it doesn’t mean it’s like PPI (payment protection insurance). Income protection is designed to pay a percentage of your salary if you can’t work because you’re ill. If you buy this policy through your workplace it’s generally cheaper than if you take it out directly through a broker or insurance company.
SAVVY TIP: Almost 85% of claims for income protection payments were paid in 2016 (the most recent figures) according to official industry data.
- If your employer doesn’t offer it, consider taking out an income protection policy for yourself (this isn’t a sales plug I have one of these policies myself because I think they’re worth it). Don’t just opt for the cheapest policy you can find online as they are not all the same.
1 Direct Line