Banks will be given 72 hours to investigate payments they think could be fraudIt has been proposed under draft legislation from the Government It comes as Santander has issued a warning about impersonation scams 

UK banks will be given more time to probe payments they suspect could be fradulent.

New legislation introduced by the Government will give UK banks the power to pause payments for up to 72 hours if they suspect a customer is being scammed.

Currently, banks are given 24 hours to process payments in most cases.

The extra time will allow banks to contact customers about payments they suspect could be fraudulent, as well as giving them the chance to contact the police and other agencies should they need to.

Crack down: Banks will be given 72 hours to investigate payments they think could be scams under new proposals from the Government

The draft legislation aims to protect customers from losing money to scammers through Authorised Push Payment (APP) fraud, one of the fastest growing types of financial scam.

Victims lost an estimated £485million to authorised push payment fraud in 2022, according to the Government.

This kind of fraud happens when scammers trick customers into sending them money by pretending to family members, romantic partners and even the police. Impersonation scams and romance scams are forms of APP fraud.

The draft legislation comes as Santander issued a warning to its customers about a new impersonation scam.

The bank warned customers that 'criminals are pretending to be us' by contacting customers and impersonating members of Santander's fraud or security team.

The scammers say there has been fraudulent activity on the account to trick customers into giving them their money.

For example, they may tell them their account is at risk and their money needs to be moved to a new account to keep it safe.

In other cases, the bank warned scammers may even direct customers to Santander's website to verify the number they seem to be calling from. They can make it look like they are calling from a genuine number with a trick called 'spoofing'.

Of the Government's draft legislation, Ben Donaldson, managing director of economic crime at UK Finance said: 'UK Finance has long called for firms to be allowed to delay payments in high-risk cases where fraud is suspected, and we are delighted to see draft legislation supporting this.

'This could allow payment service providers time to get in touch with customers and give them the advice and support they need to avoid being coerced by the criminals who want to steal their money.

'This could potentially limit the psychological harms that these awful crimes can cause and stop money getting into the hands of criminals.'

New protections against APP fraud will come into force on 7 October this year, the Payments Systems Regulator announced in December.

Under the new regime, payment firms, including banks and building societies, will be required to reimburse customers within five working days of a report that they have fallen victim to APP fraud.

The maximum compensation payable is set at £450,000 with a claim excess of no more than £100 to be set by banks. Where a customer is vulnerable, no excess may be applied.

Will Christopher, civil fraud partner at Kingsley Napley, said: 'It seems entirely sensible banks should be given more time to process transactions if they have concerns about fraud or dishonesty, especially given they will be on the hook for reimbursing eligible victims up to a maximum of £450,000 from October under related proposals.