PSR confirms implementation date for APP scam protections as 7 October

Source: Payment Systems Regulator

APP fraud is a significant issue and can have a devastating impact on victims. The PSR is taking a leading role in improving outcomes for consumers by introducing new protections for victims of APP scams, while incentivising industry to implement enhanced fraud prevention tools. 

When the PSR published its requirements for payment firms to reimburse APP scams victims in December 2023, it committed to consider high value APP fraud claims and publish the findings. The PSR’s review found that – out of over 250,000 cases - there were 18 instances in 2023 of people being scammed for more than £415,000, and 411 instances of more than £85,000. The analysis also highlighted that almost all high value scams are made up of multiple smaller transactions, reducing the effectiveness of transaction limits as a tool to manage exposure. 

The PSR also considered additional evidence from the industry and FCA about the maximum liability amount. After considering the findings and evidence provided, the PSR is consulting on a new cap. If confirmed, this would bring the cap in line with the Financial Services Compensation Scheme (FSCS) limit which is currently £85,000 and well understood by consumers. This would still ensure enhanced consumer protections against APP scams, with clear incentives on financial firms to continue doing all they can from preventing fraud from happening in the first instance. The previous maximum reimbursement value had been set at £415,000, in line with the Financial Ombudsman maximum reimbursement limit at that time.  

The proposed new cap will still see over 99% of claims (by volume) covered. The PSR’s measures to protect people against APP fraud and make sure victims get their money back remain stronger than anywhere else in the world. The regulator has also committed to keeping this under consideration through its post-implementation review. The PSR fully expects all firms to meet their obligations as responsible providers and will continue to follow up with all firms to support this. 

David Geale, the PSR’s managing director, commented: 

“We listened to concerns about the reimbursement limit and committed to collecting more evidence to inform our approach. As a result, we are now consulting on a limit that still covers the vast majority of authorised push payment scams and strikes the right balance. Under our proposals, consumers in the UK will still receive world-leading protection, payment providers will still be heavily incentivised to improve anti-fraud protections and we maintain effective market competition and innovation.”  

Why the PSR is proposing this change 

The PSR’s reimbursement requirements represent a significant shift in both consumer protections and demands on PSPs.  

For larger firms who have been operating under the voluntary CRM code for a number of years, the adjustment will be smaller, but some smaller firms have a much bigger adjustment to make.  

However, there remains an urgent need for action. This evidence-based proposal will strike a balance between strong consumer protections, incentivising firms to implement robust anti-fraud measures, and maintaining market competition and innovation. Importantly, the implementation date for these major APP fraud protections is unchanged, meaning people will still see the benefits in October. 

Pay.UK, which operates Faster Payments, the payment system to which the protections apply and through which most APP fraud flows, has confirmed it will be ready for 7 October. 

The consultation closes on 18 September. The PSR will consider the responses carefully and confirm its final approach before the end of September. 

ENDS.

Notes to editors:

• The PSR’s requirements will come into force on 7 October 2024. 
• These mandatory reimbursement requirements are part of the PSR’s broader fraud prevention measures, which have also included the mandatory implementation of the name-checking service, Confirmation of Payee, enhanced data sharing between payment firms and increased transparency of payment firms’ fraud performance and reimbursement rates.