The UK’s Payment Systems Regulator (PSR) has announced plans to enhance protections for victims of authorised push payment (APP) fraud, set to take effect in October 2024. This initiative, described as a “step-change” in fraud protection, aims to ensure that the majority of funds lost to APP fraud are returned to victims, with a maximum reimbursement cap of £415,000. While sending payment firms may implement a claim excess of up to £100, this is not applicable for claims made by vulnerable consumers.
For the first time, the financial responsibility for reimbursement will be equally shared between sending and receiving firms, introducing new incentives for those on the receiving end.
APP fraud has rapidly emerged as a major concern in the UK, with reported losses nearing £500 million over the past year. Consumer advocates and lawmakers have urged banks to address this growing issue and expedite the reimbursement process for innocent victims.
Under the forthcoming regulations, the majority of APP fraud victims can expect to receive reimbursement within five business days, with additional protections set to be provided for vulnerable customers.
The PSR emphasizes that while there is a focus on consumer vigilance when making payments, the responsibility will shift to banks to demonstrate that they did not act with gross negligence.
Chris Hemsley, managing director of the PSR, stated, “Our approach incentivizes banks and other payment firms to prevent APP fraud from happening in the first place while ensuring victims are protected in a consistent way.”
A spokesperson for Pay.UK expressed their support for the PSR’s finalized legal instruments regarding the APP reimbursement framework, confirming their commitment to implement the regime in the coming year.