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The current Banking Code offers consumers some protection against losses arising from fraud. But in a follow-up to its earlier report on personal internet security, the Lords claim the code doesn't go far enough.

It claims banks often deny liability for fraud where a password or PIN has been used, claiming that the customer must have been negligent or complicit in the fraud.

"The poor old consumer is in a situation that's not satisfactory at the moment," claims Lord Broers, speaking exclusively to PC Pro.

"They are told they shouldn't go to the police, they should go to the bank first [when reporting fraud]. The argument is that if they still want to go to the police, they can go the police. But it's not implicit to us that the police are not going to say 'well, if the bank doesn't want to look at your case we're not going to look into it'. They're going round in circles."

"We feel the responsibilities that the banks have in respect of fraudulent transactions should be underwritten by legislation, not just the Banking Code."

The Lords have also restated their opposition to the regulations introduced last year, which encouraged consumers to report financial fraud to their bank rather

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than the police. "We reiterate our strongly held view that the the current reporting sequence is wholly unsatisfactory and that it risks undermining public trust in the police and the internet," the report states.

Data leak disclosure

The Lords have also restated their call for a data breach notification law, that would force organisations to come clean if customer security had been compromised. The Lords claim the Government's own embarrassing data breaches, most notably the HMRC disc fiasco, has focused its mind on the issue, after the recommendations made in the Lords's initial report last summer were largely ingored.

"The arguments against the breach law we just don't accept," says Lord Broers. "The fact that in America they say people stop taking notice when the tenth bank tells everyone they've lost data - I think that's a silly argument. We've got to have this information, and then authorities have to consider how they're going to deal with it."

Lord Broers claims the Information Commissioner must also be more proactive in punishing data breaches. "Whether he has the resources to do that, heaven knows, but I think if we're going to put people's feet to the fire on this, there are going to have to be more prosecutions," he said.

Government response

The Lords say they now expect a second Government response to their follow-up report. But they don't plan to let the issue lie if the Government once again ignores their recommendations.

"We will wait and see and the Select Committee will keep its eye on this," says Lord Broers. "If nothing happens there will be a follow-up report to the follow-up report," he adds.