Examination of Witnesses (Question Numbers
80-99)
MR PAUL
SMEE, MR
STEPHEN LOCKE
AND MS
SANDRA QUINN
16 MARCH 2010
Q80 Chair: Internet banking?
Ms Quinn: Internet banking fraud
did go up. It went up from £50 million to just under £60
million, and that is an issue where we need to make sure that
we provide secure payment methods going forward.
Q81 Chair: And what about the cheque
fraud?
Ms Quinn: Cheque fraud figures
went down in 2009 to just under £30 million. The cheque fraud
figure is quite an interesting figure though, because what is
behind that is the fact that about 95% of all cheques—
Q82 Chair: So cheque fraud—
Ms Quinn: Potential cheque fraud.
Q83 Chair: Right, okay. Cheque fraud
went down to £30 million but card fraud went down to £440
million and internet banking fraud went up to £60 million,
so if you take the £440 million and the £60 million
that in my figures is £500 million fraud but cheques have
just got £30 million fraud, much less than 10%.
Ms Quinn: The two figures are
not comparable. The figure for card fraud is a gross figure.
Q84 Chair: Make it comparable for
us. That is why you are here.
Ms Quinn: Okay. The comparable
figure is that about 95% of all cheque fraud is caught before
it becomes fraud, so the comparable figure would be about £600
million for cheque fraud.
Chair: Alive in my mind is the £500
million and the £30 million.
Q85 Mr Breed: Mr Locke, as independent
director how many times have the four independents voted and obtained
a veto on anything that the Payments Council has done?
Mr Locke: We have not actually
formally exerted the veto because we have not needed to, but the
fact that it is there leads all the Board to recognise that when
we speak our views have a particular weight, and there is a wide
awareness that if we needed to operate the veto that would happen.
Q86 Mr Breed: So effectively you
have never voted?
Mr Locke: We have not voted in
quite those terms but, as I say, the availability of that sanction—
Q87 Mr Breed: Everything that has
gone through at the present time has gone through with no votes
cast?
Mr Locke: Views are expressed.
I do not think we have necessarily had to cast a formal vote.
Q88 Mr Breed: But no vote currently
cast?
Mr Locke: Have we ever done it?
Q89 Mr Breed: So you have arrived
at the position you are at at the present time without any votes
being cast and so everybody has agreed with everything?
Mr Locke: I do not think that
is true at all. There are many areas where we have expressed views
very forcefully and where the banks have taken notice. For example,
when the decision was made on the cheque closure programme back
in December I pressed very hard for recognition of the concerns
in relation to vulnerable consumers, for full openness in relation
to the criteria and how we develop them in terms of what is acceptable,
and then transparency in applying those criteria to the eventual
data, and finally I pressed hard to ensure that the banks did
not use the decision as a smokescreen for withdrawing cheques
before the 2018 deadline as part of their corporate policy. All
those points were agreed, but I was very concerned about all of
them before we could make a final decision.
Q90 Mr Breed: Being concerned about
them and being able to do something about it through the mechanism
of the board seem to be two entirely different things.
Mr Locke: We have effective mechanisms
for dealing with them because we are able, if necessary, to vote
to stop the whole thing going through.
Q91 Mr Breed: But you have never
voted.
Mr Locke: We did not need to vote
because people were well aware what the view was.
Q92 Mr Breed: You chair the users
group. You have identified charities, small businesses and perhaps
older people. Who else have you identified as being groups that
might be affected adversely by this decision?
Mr Locke: I chair the Consumer
Users Forum and that represents consumer interests. There are
two other user forums, one dealing with small businesses and one
dealing with larger businesses.
Q93 Mr Breed: So small businesses,
charities and older people, who else have you identified as a
consumer that might be affected?
Mr Locke: There are all sorts
of consumers who have particular needs, not necessarily older
people but people who do not speak English as their first language,
people who are not happy using technology, people who only arrived
in this country recently and set up bank accounts, a whole range
of people who live in deprived or remote areas where there are
limited facilities around, people who do not have internet access.
There is a very wide range of different types of disadvantage
which we have had to factor in.
Q94 Mr Breed: So do you feel that
you represent their interests?
Mr Locke: It is my job to talk
in detail to all of the people represented around the table at
the Consumer Users Forum, to listen very hard to them—and
there are a number of areas where they have had a major influence
in what we have done—then to represent those views back
to the board, which I do regularly. But, of course, in terms of
my own decision and my own input into board decision-making, I
reach my own views in the light of that.
Q95 Mr Breed: Mr Smee, will any change
in the system require legislation?
Mr Smee: We believe not, no.
Q96 Mr Breed: So, in fact, Parliament
would not need to be involved in any of this decision-making on
behalf of the whole of the country. Do you think Parliament should
through legislation give some effect to any changes, bearing in
mind the enormous range of effects it is going to have on businesses,
consumers, the economy and everything else?
Mr Smee: I do not believe there
is a need to legislate in this area although I am sure this Committee
will have a continuing interest in what is an eight-year project.
Q97 Chair: Sandra, we go back to
what you said. You said that the figure for cheque fraud would
have been far higher if attempted fraud had not been detected
and the cheques stopped. Is that correct?
Ms Quinn: Yes. About 95%.
Q98 Chair: Is that not just another
way in which cheques are safer?
Ms Quinn: I think the key is that
there are some losses for cheque fraud that are not in the £30
million figure.
Q99 Chair: If I may intervene, cheques
are safer now so you are preventing fraud being even higher, so
it has to be a good thing?
Ms Quinn: If you speak to lots
of other businesses, they see that cheque fraud is a rising risk
that they are concerned about.
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