The Payment Systems Regulator (PSR) has confirmed new requirements for banks and payment companies that will ensure more people than ever before will get their money back if they are a victim of Authorised Push Payment (APP) fraud; prompting more action to prevent these frauds from happening in the first place. This significant new level of protection is a world first in the battle against APP fraud.
APP fraud has quickly become one of the most significant types of fraud, both in the UK and globally. It continues to have a devastating impact on many people’s lives, with losses totalling nearly £500 million in the last year.
The PSR wants people to be protected when making payments. Following consultation, it has today set out how mandatory reimbursement will work in practice, clarifying what this means for customers and firms. The new requirements will prompt a step change in the culture of payments to improve fraud prevention and focus all firms on protecting people.
There will be new rules in Faster Payments – the payment system across which the vast majority of APP fraud currently takes place – strengthening Pay.UK’s2ability to tackle fraud. All payment firms will be incentivised to take action, with both sending and receiving firms splitting the costs of reimbursement 50:50.
Customers will be more protected under consistent minimum standards, with most APP fraud victims being reimbursed within five business days and additional protections offered for vulnerable customers.
The industry will have clearer guidance to follow, including around the ability to apply a claim excess and maximum level of reimbursement, which the PSR will consult on later this year.
The Financial Services and Markets Bill, which is currently making its way through Parliament, will remove current barriers and allow the PSR to direct firms to reimburse customers. The Bill is expected to receive Royal Assent in 2023, after which the PSR will be able to enforce its requirements on payment firms.
Chris Hemsley, Managing Director at the PSR, said “Once implemented, our changes will deliver a major shift from the status quo, giving everyone across the payments ecosystem a reason to act to prevent fraud from happening in the first place. That means everybody who makes payments can do so with much greater confidence, knowing that they will be better protected against fraudsters.”
“In delivering this step-change, the UK will be at the forefront of the fight against APP fraud globally. And by confirming these changes now, it means we will be ready to act once new laws come into effect. We will continue to work with Pay.UK, industry, consumers and organisations beyond the payments sphere to drive effective intervention and start to turn the tide against APP fraud.”
Economic Secretary, Andrew Griffith, said “This is an important step in the Government’s fight against fraud. As payment scams become ever more sophisticated, it is right that the Government, the regulator and industry work together to ensure victims are not left out-of-pocket by fraudsters. In parallel, the Government is looking at how to enable banks to have the ability to identify and pause suspicious payments inflight where appropriate.”
Responding to the new requirements, Mike Haley, CEO of Cifas said “These requirements highlight the critical importance of all PSPs undertaking industry standard fraud checks at all stages of the customer journey, to help avoid scam payments being made to criminals and used to fund other types of serious and organised crime. ”
“Fraud continues to rise, with cases filed to the National Fraud Database in 2022 up 14% compared to the previous year. The deepening economic crisis continues to create opportunities for scammers, who prey on members of the public experiencing financial difficulties.”
“Our focus as an organisation is on delivering data, intelligence and learning solutions, to empower organisations to better scrutinise payments, protect consumers from APP scams and wider economic crime, and prevent fraud losses before they occur.”
Emma Lovell, Chief Executive Office from the Lending Standards Board (LSB) said “Evidence shows that scams cause long lasting impacts on victims, including deteriorating mental health, along with losing trust in others. We have long said that the focus across industries must be on stopping scams; this is the only way to truly protect customers, and reinforces the need to maintain an industry code.”
“The LSB will now take this forward with support from key industry stakeholders and signatory financial services firms who want to offer their customers the best protections.”