Monday 24th October 2016                 Change text size:

Finance watchdog warns of risks of mobile banking

Photo: Karola Riegler via Flickr

The Financial Conduct Authority (FCA) has issued preliminary findings from an investigation into mobile banking services, and has warned that users may face fraud and security issues.

It says that consumers using mobile phones and tablets to make payments and do other financial transactions should pay attention to malwares, virus, fraud and money laundering. It is the regulator’s first review on the issue, and is set to be completed by 2014.

The FCA said that in the event of fraudulent access, customers might be unable to check their account, facing financial losses and significant distress.

A third party might also use mobile banking applications for money laundering activities, it adds, “particularly where a mobile payment service is not linked to the customer’s current account and there aren’t additional checks to verify the identity of the payee and recipient”.

The FCA suggests that users should make sure their phone is sufficiently protected against viruses when downloading a mobile banking app and ensure that in case of theft or loss, other people cannot easily access banking details.

Clive Adamson, director of supervision at the regulator, said, “Mobile banking is an exciting development in financial services, with increasing numbers of consumers attracted to the convenience of banking on the move.

According to the FCA, one in five adults in the UK have already made a payment through mobile phone. Meanwhile, over a quarter use them to check bank balances, and more than half would pay for goods at the local supermarket with the phone if there was the possibility of doing so.

The review concludes, “By publishing these initial thoughts we want to make sure that the industry knows exactly what we’re looking into, and consumers have a clearer idea of some of the potential risks.”

Further reading:

Big banks to pay out £1.3bn to consumers mis-sold credit card insurance

Mark Carney: finance that becomes disconnected from the economy is ‘useless’

Public urged to wage ‘guerilla war’ against big banks

Big five’s banking monopoly at risk, with 2.4m closing accounts in 2012

The Guide to Sustainable Banking 2012

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