UK Payment Systems Regulator confirms new requirements for APP fraud reimbursement
The UK Payment Systems Regulator (PSR) today 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 APP fraud.
Authorised push payment (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.
PSR has 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’s ability 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.
- 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.
By the end of 2023 the PSR will publish the claim excess and maximum level of reimbursement, additional guidance on the customer standard of caution (gross negligence) and publication of all legal instruments. In 2024 the new reimbursement requirement will come into force.
Alongside reimbursement, the regulator is increasing transparency through the publication of data on how well firms are protecting customers from fraud, promoting intelligence-sharing to spot and prevent fraudulent transactions, and expanding the roll-out of the name-checking service Confirmation of Payee.