Banks and other payment firms must reimburse defrauded customers to a maximum of £415,000 from October 2024 to help combat scams,
The Payment Systems Regulator (PSR) has published details of what it describes as “bold action” on authorised push payment (APP) fraud. The new rules will come into force on 7 October 2024.
From October, the upper claim limit will match the Financial Ombudsman Service (FOS) upper limit of £415,000 and a claim excess of no more than £100 may be applied.
The PSR described the move as a “step-change in fraud prevention” and said it will see the vast majority of money lost to APP frauds reimbursed to victims. According to the PSR, the decisions involved “difficult trade-offs” and as a result, the regulator will monitor the incidence and impact of high value APP scams over the next 10 months before the reimbursement requirement start date.
The PSR also confirms that “sending” payment firms can (but do not have to) apply a claim excess of up to £100 if they choose to. However, this does not include claims made by vulnerable consumers.
Despite the proposed rule change, consumers still need to take care when making payments. The PSR also set out the circumstances when a bank might reasonably consider a person has not been sufficiently careful.
For example, consumers should have regard to interventions (such as warning messages) from their bank; should promptly notify their bank of suspected fraud; share information with their bank to help them assess a claim; and consent to fraud details being reported to the police.
But it will not be sufficient for a customer to have merely failed to meet one of these requirements, and the onus will be on the bank to prove that the customer “acted with gross negligence”.
The PSR said this was a “very high bar”, and it expected that a small minority of cases will be subject to this exception. It added that the exception does not apply to vulnerable consumers.
Chris Hemsley, the PSR’s managing director, said: “The action we’re taking significantly increases the level of protection for people and puts the UK at the forefront of APP fraud protections globally. Our approach incentivises banks and other payment firms to prevent APP fraud from happening in the first place while ensuring victims are protected in a consistent way.
“Payment firms are already getting ready by improving fraud controls and more people are getting their money back. We now expect the momentum to implement the full protections to increase.
“We’ll be working closely with Pay.UK and payment firms to make sure they’re fully prepared to implement the new requirement next year.”
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