The UK’s banks will soon be required to publish data related to their performance on authorized push payment (APP) scams, including reimbursement levels for victims and details about which banks and building societies’ accounts are being utilized to receive fraudulent funds. This new proposal comes from the payment systems watchdog amid increasing concerns about a surge in APP fraud, where customers are deceived into divulging their security information by scammers impersonating authority figures. Recent figures from UK Finance indicate that losses from APP fraud surpassed those from card fraud for the first time in the first half of 2021.
The payments regulator expects financial institutions to take greater action to prevent these scams and to improve protections for victims. Alarmingly, over three-quarters of bank customers who fall victim to APP fraud have not received reimbursements from their banks, despite a voluntary code of practice designed to ensure refunds in “no blame” cases.
This consultation by the Payment Systems Regulator (PSR) aligns with proposed legislative changes from the Government aimed at establishing mandatory reimbursement for scam victims. John Glen, economic secretary to the Treasury, stated, “The Government’s position is that liability and reimbursement requirements on firms need to be clear so that customers are suitably protected. It is welcome that the Payment Systems Regulator is consulting on measures to that end, and to help prevent these scams from happening in the first place.”
Chris Hemsley, managing director of the PSR, emphasized that while some voluntary industry initiatives have aided victims, many institutions have yet to adequately address the issue. He noted, “The range of steps we plan to take will show people which banks and building societies are likely to respond to frauds appropriately and will put the onus on financial institutions to improve their detection and prevention of scams. We are also outlining how to make reimbursement mandatory for those blameless victims so that we can swiftly implement protections once the law changes.”
The PSR’s latest consultation will remain open until January 14, 2022. Consumer advocacy group Which? has praised the proposed measures as a significant victory for bank customers. Anabel Hoult, CEO of Which?, commented, “People are still losing life-changing sums of money every day, so the Treasury must act quickly to introduce the necessary legislation. The regulator must also ensure it is prepared to implement mandatory reimbursement rules as soon as the legislation is passed, so that fraud victims are treated fairly and consistently when seeking to recover their funds.”
Hoult further stated, “Which? has been urging banks to be transparent about how they handle fraud victims, so it’s a positive step that the PSR is planning to direct firms to publish data showing the number of fraud cases and their reimbursement practices. The banks must fully cooperate in implementing these long-overdue requirements.”