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Regulator rejects 'desperate attempt' to delay refund rules for scam victims

Regulator rejects 'desperate attempt' to delay refund rules for scam victims
Matt Browning
Written By:
Matt Browning
Posted:
11/06/2024
Updated:
11/06/2024

The Payment Systems Regulator (PSR) has rejected a request from an industry body to delay new refund rules for scam victims.

An independent representative for the industry, The Payments Association, asked for the legislation to reimburse victims of authorised push payment scams to be pushed back by a year.

This is despite the regulations that were originally planned for April 2024, being delayed by six months to 7 October.

From that date, banks, building societies, and payment companies will have to pay victims of APP scams within five working days, which is an extension of the previous 48-hour time limit.

However, it won’t apply to international payments and payments made on other systems, such as a customer who sends funds to their account at a crypto exchange and pays a criminal in a crypto currency.

The limit for the repayment to victims will be £415,000 per claim, which The Payments Association wanted reduced to just £30,000. Currently, the refund amount is at the discretion of the business dealing with the customer’s case.

One of the main worries the trade body has aired on the rules is that smaller fintech companies are disproportionately hampered by the changes made to investigating APP scams.

Its concerns were shared by 30 firms who signed a letter to the economic secretary Bim Afolami last month asking for the changes to be paused.

Rules for scam victims confirmed for October

Tony Craddock, director general of The Payments Association, said in a statement: “We believe that to mitigate systemic risk and prevent damage to the payments industry from some of the PSR’s current plans, significant changes are needed.”

However, the regulator stood firm and confirmed it would not further add to the delay of the rule’s implementation.

David Geale, the interim head of the PSR, responded: “We will continue to engage with and support the industry, taking into account all feedback as we move forward and as the industry works hard to implement the systems and processes needed for the new reimbursement requirements.”

APP fraud occurs when people are tricked into transferring money to a seemingly legitimate account that is actually controlled by a scammer.

The issue soared in 2023, where cases rose by 12% to reach 232,429 as victims lost a total of £459.7m.

‘Desperate attempt from a small section of banking industry’

Rocio Concha, Which? director of policy and advocacy, slammed the request from The Payments Association.

Concha said: “It’s unacceptable to see The Payments Association trying to take advantage of a change of leadership at the PSR to call for a further delay.

“Fraud continues to run rife in this country, affecting victims whose lives are upended by ruthless scammers. Payments firms were warned just last year that a lack of robust controls meant they posed an unacceptable risk of harm to their customers and to financial system integrity.”

She added: “Instead of seeking to amend or delay these rules, payment providers should be focusing on getting their house in order to protect customers from fraud.

“If the PSR and ministers in the next government are serious about protecting consumers from fraud, they will see this request for what it is – a desperate attempt from a small section of the banking industry to shirk responsibility – and must press ahead with the current schedule.”