Credit, Collections & Insolvency News
The interim funding arrangement to pay compensation to victims of authorised push payment (APP) scams in situations where both the customer and their bank have met the standards expected of them under the APP scams voluntary Code is being extended to 31st December 2020.
The payment service providers (PSPs) who have provided the interim funding since the Code launched on 28 May 2019 have agreed to continue doing so until the end of this year to allow more time for regulators, government and industry to deliver a long-term, sustainable funding arrangement.
The Code provides new consumer protections against authorised push payment fraud, with signatory PSPs committing to reimbursing the victims of this type of fraud, provided the customer has met the standards expected of them under the Code.
In situations where both the victim who lost money and their bank have met the required standards set out in the Code the customer of the Code signatory bank will still receive compensation for the money lost, with the PSP subsequently claiming the money from the interim fund.
Stephen Jones, Chief Executive of UK Finance said “The banking and payments industry is committed to defending their customers from fraud and stopping stolen money from going to criminals. The APP scams voluntary Code has set stronger standards for payment service providers to help protect customers; however there is a responsibility on all industries, not just banking and payment providers, to do more to stop these criminals from being able to target customers.”
“There is strong agreement across our sector that the development of any sustainable funding solution to compensate victims of scams must also include those third-party organisations whose data and platforms are used by criminals to facilitate fraud. The agreement to continue the interim funding arrangements until the end of this year gives important time for this to be agreed and implemented.”
“We share the views expressed by the Treasury Committee and Which? that issues of liability and reimbursement should best be addressed by new laws rather than just a voluntary Code alone.”
Peter Janes, Founder and CEO at Shieldpay said“While this compensates victims in the short-term, the fact is that extending the interim funding arrangement is focusing on the wrong end of the problem. It’s papering over the cracks and does nothing to tackle the long term issue of APP fraud. Unless there is a complete change in approach, and banks finally decide to tackle the root of the issue, people will continue to suffer at the hands of fraudsters and the industry will be forever chasing its tail to compensate them. The financial and emotional impact of fraud can’t be understated; people’s life savings can disappear in a blink of an eye. Technology which fuels greater levels of security exists and its implementation must become more widespread, and be accompanied by new laws to better protect consumers.”
Gareth Shaw, Head of Money at Which?, said “While this latest extension will provide some short-term breathing space, it only exposes how far away the industry and regulators are from finding a permanent solution for reimbursing innocent bank customers who fall victim to scams.”
“A voluntary industry-led approach is not a long-term solution to the problem. The government must consider directing the regulator to make the code and reimbursement mandatory – to finally ensure millions of people are no longer at risk of losing life-changing sums of money.”