The Payment Systems Regulator (PSR) confirms new requirements for banks and payment companies that will ensure more people 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.

APP scams happen when someone is tricked into sending money to a fraudster posing as a genuine payee and has quickly become one of the most significant types of fraud, both in the UK and globally. APP scams generally fall into one of the following two categories:

  • malicious payee’, for example, tricking someone into purchasing goods which don’t exist or are never received.
  • ‘malicious redirection’, for example a fraudster impersonating bank staff to get someone to transfer funds out of their bank account and into that of a fraudster.

Every year thousands of individuals and businesses fall victim to APP scams, which can have a devastating impact on people’s lives.

The PSR wants people to be protected when making payments. Following consultation, it has recently set out how mandatory reimbursement will work in practice, clarifying what this means for customers and firms. The aim of the new requirements is 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.
  • 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.

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