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Wednesday, 1st August 2018, 12:42 pm
Updated Friday, 31st August 2018, 5:05 pm

Q.I was gobsmacked when I read last week's Streetwise about the two people who took a massive hit trading in Bitcoin. Surely there's noting wrong in trading in crypto currencies providing you're willing to take the risk and know what you're doing? How's it the banks fault?

V.N. (email)

 

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A.

Financial technology trading is clearly an emerging way forward in the personal investment sector, and you're right not to knock it.

However, the emerging technology lends itself to a proliferation of scams by sophisticated fraudsters and con artists.

We have to accept that fake news and convincing video endorsements on social media have contributed to the problem. Many elderly and novice investors have been taken in primarily because they've not been sufficiently sceptical about the online hype promising sky high returns.

As usual the regulatory and avoidance mechanisms are running well behind the technology. The internet is global so it's no reliable guide to potential fraud to infer only traders in the UK are to be trusted. That's equally naive.

The plain fact is the banks have the resource and mechanisms to be far more proactive in warning their customers prior to transferring large sums of money to suspect recipients.

With their access to the Financial Conduct Authority's financial services register there's no reason why they can't proactively contact their customers to confirm the transfer prior to it being sent on its way to a dodgy destination.

Some banks are far better at safeguarding their customers' money than others. My bank for example will send me a warning text if any unusual activity appears on my account. Transfers to unusual or unknown recipients of more than £100 will prompt a text or secure message for confirmation authorisation.

It's for this reason the government is determined to introduce a bank hotel style star rating to drive up security standards and enable consumers to make more informed choices about who they trust to look after their money.

 

ENDS