The new requirements will assist with making sure that more people will receive their money back should they fall victim to Authorised Push Payment (APP) fraud, while concomitantly prompting more action to prevent these fraud types from taking place.
New rules will be set in Faster Payments, the payment system across which most APP fraud is taking place, to strengthen Pay.UK’s ability to tackle fraud.
Each payment firm is going to be incentivised to act, with sending and receiving firms alike splitting the costs of reimbursement 50:50.
Customers are to be increasingly protected under consistent minimum standards, with most APP fraud victims being reimbursed within five business days and additional protections being provided for vulnerable customers.
The industry is going to have clearer guidance to follow, including related to the ability to apply a claim excess, and maximum level of reimbursement, which the PSR is set to consult on later in 2023.
The Financial Services and Markets Bill, which, as of now, is making its way through Parliament, is set to remove current barriers and enable the PSR to direct firms to reimburse customers. Per the press release, the Bill is expected to receive Royal Assent in 2023, following which the PSR will be able to enforce its requirements on payment companies.
Chris Hemsley, Managing Director at the PSR advised that once implemented, the changes are to deliver an exponential shift from the status quo, providing everyone across the payment ecosystem with a reason to act towards preventing fraud from taking place. The official added that the enterprise is set to continue collaborating with Pay.UK, industry, consumers, and organisations beyond the payments sphere to enable effective intervention and start to better combat APP fraud.
Economic Secretary, Andrew Griffith added that the news marks an important step in the Government’s fight against fraud, stating that as payment scams are increasingly sophisticated, the Government, the regulator, and the industry collaborate to ensure victims are not ‘left out-of-pocket’ by fraudsters. What is more, concomitantly, the Government is researching how to provide banks with the ability to identify and pause suspicious payments inflight, wherever appropriate.
The next steps set to take place are as follows:
In July, the PSR will consult on the draft legal instruments to set reimbursement requirements in place.
In August, the PSR will consult on the maximum level of reimbursement and claim excess, as well as additional guidance on the customer standard of caution (gross negligence).
In October, the PST will provide the final legal instruments to Pay.UK and an additional consultation on the legal instrument to be given to PSPs.
By the end of 2023, the PST will publish the claim excess and maximum level of reimbursements, additional guidance on the customer standard of caution (gross negligence) and publication of all legal instruments.
In 2024 the new reimbursement requirement is set to come into force.
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