High street banks could be forced to reimburse all scam victims under rules proposed by the Payment Systems Regulator (PSR). The new regulations would also see banks forced to publish figures showing how often they pay back blameless fraud victims.
The PSR has launched two calls for views exploring greater protections for everyone using payment systems: one relating to the protections against APP scams, and the other looking more broadly at consumer protection in interbank (bank-to-bank) payments.
Authorised Push Payment (APP) scams (when someone is tricked into making a payment to a fraudster) have been a significant focus for the PSR. These scams can have a devastating impact on victims and while the introduction of the Contingent Reimbursement Model (CRM) Code has seen some victims getting their money back, last year the PSR called on industry to deliver better outcomes for victims.
In the first half of 2020, losses due to APP scams totalled £208 million. In the regulator’s proposals, there are three measures that could help to stop APP scams from happening and, when they do, protect the people who fall victim. These measures would apply to payments made through Faster Payments and Bacs Direct Credit:
The PSR considers the three options – applied individually or in combination – could make a significant impact on the prevention of APP scams so people don’t become victims in the first place and, where someone does, that stronger protections are in place to help them. By strengthening protections against APP scams – including by extending protections beyond the current CRM code signatories – a reimbursement standard that is mandatory will mean better outcomes can be achieved for everyone.
On the PSR’s plans for APP scams protections, Chris Hemsley, Managing Director of the PSR said ‘We want to make it harder to commit these devastating crimes and also see victims properly protected. In this call for views, we set out a suite of measures that could have a significant impact on both reducing fraud and improving the protections for everyone. I look forward to hearing everyone’s views, to help shape our proposals.”
In addition to APP scams protections, the PSR is also looking at the levels of protection available to consumers when they make payments from their bank account directly to another bank account using what is called an interbank payment method. More and more people are transferring money using a smartphone app or online banking to send payments to family and friends, or businesses.
As more of us make transfers in this way, the PSR is keen to understand whether the protections currently in place are sufficient. People and businesses should feel confident when they are making a payment and the PSR is therefore exploring how it, together with the industry, can ensure that consumers and businesses are not disproportionately harmed when something goes wrong with their interbank payment.
Hemsley continued “The UK is a world-leader in payments and the move to digital payments is increasing. As it does, people will be looking for choice – but having choice should also mean having the right levels of protection. In this call for views, we want to understand what protections our banks and building societies should have in place and how we can support this emerging payment method for everyone’s benefit.’
The PSR is inviting responses to both calls for views and responses should be provided on both calls for views by 8th April 2021.
Gareth Shaw, Head of Money at consumer group Which?, said “It’s clear consumer protections for bank transfer scams under the [voluntary] code aren’t working. Reimbursement rates are far too low, customers are being treated inconsistently and there is no transparency about which banks are turning down reimbursement in the vast majority of cases.”