Banks tell us to spot the warning signs of scams – so why aren’t they spotting them? writes Dean Dunham KC

Stop. Think. Check who you’re paying. Look for warning signs and if something doesn’t feel right, don’t transfer your money.

It’s sensible advice. But shouldn’t we expect banks themselves to follow it?

The Financial Conduct Authority is now looking closely at the role of regulated banks whose services were used by high-risk, unregulated loan-note investment schemes that subsequently collapsed.

The figures are staggering. NatWest reportedly processed around £110 million for the 79th Group, a property investment operation that insolvency practitioners have alleged had the hallmarks of a £250 million Ponzi scheme. Its operators have denied wrongdoing.

More troublingly, reports suggest money continued to be received into the NatWest account even after four people connected with the group were arrested as part of a police investigation into suspected widespread fraud.

Lloyds is meanwhile facing questions over approximately £160 million raised from investors by collapsed Godwin Capital, which administrators have also alleged was operated as a Ponzi scheme.

The FCA says it is now looking closely at the role of regulated firms, including banks, and will act where firms have fallen short, and so it should.

I’m not suggesting banks should automatically be liable whenever one of their business customers turns out to be dishonest. Nor should consumers assume that because an investment company has an account with a major high-street bank, the bank has somehow approved or guaranteed the investment.

But banks have sophisticated transaction-monitoring systems, dedicated financial-crime teams and legal obligations designed to identify suspicious activity.

Ordinary consumers don’t have any of that.

So there’s an uncomfortable contradiction when banks tell a pensioner transferring £20,000 to spot the red flags, while potentially enormous sums are flowing through accounts within the banking system.

Consumers must take responsibility for checking investments, particularly unregulated ones promising unusually attractive returns.

But responsibility cannot only ever travel in one direction.

If banks expect customers to recognise suspicious transactions, consumers are entitled to expect banks to do the same.

The FCA now needs to establish exactly what the banks knew, what warning signs existed and, crucially, when they acted upon them.

Banks cannot spend millions telling us to spot scams while failing to spot what’s happening under their own noses.

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Dean Dunham KC presents LBC's Consumer Hour every Sunday from 9pm-10pm.

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