Commenting on new proposals from the Payment Systems Regulator
(PSR) for victims of authorised push
payment fraud to be reimbursed by their bank, , Chair of the Treasury
Sub-Committee on Financial Services Regulations, said:
“We’ve heard truly shocking and heart-breaking stories of
individuals whose lives have been turned upside down by criminal
fraudsters, which is why we’ve been calling for the regulator to
be robust in using its powers to mandate banks to reimburse their
customers.
“We highlighted a potential conflict of interest with the
regulator’s initial proposals, so we are pleased the regulator
has addressed this by accepting our recommendation to enforce
bank compliance with reimbursement rules. This will result in
better outcomes for consumers, faster.
“There are still several steps to go in this process, and the
Sub-Committee will continue to hold the regulator’s and the
banks’ feet to the fire until the scheme is introduced to ensure
fraud victims are properly protected and that no more
foot-dragging occurs.”
Earlier this year, the cross-party Sub-Committee of MPs criticised
the PSR’s proposals to hand responsibility for
implementing mandatory reimbursement to a separate body, Pay.UK,
without directing banks to follow reimbursement rules.
The Committee found:
“Pay.UK is not a regulator. It lacks the necessary independence
and enforcement powers to be effective in enforcing compliance
with APP fraud reimbursement rules.” (para 42)
“We recommend the PSR revise its plans to incorporate its use of
directions to payment service providers under section 54 of the
Financial Services (Banking Reform) Act 2013. This will give the
regulator more control over the process and result in better
outcomes for consumers.” (para 45)
The Payment Systems
Regulator’s response to the Committee states:
“Pay.UK will be required to make the rule changes we set out, and
– in a change to our initial proposals – all PSPs will be
required to comply with them. Both requirements will be backed by
our regulatory oversight and enforcement powers.
“Consistent with the Sub-Committee’s recommendation, this change
in our approach further reduces the risk of delay, by the PSR
making more use of its powers of direction.”
Fraud is the most common crime in England and Wales, and one of
the most reported in Scotland. Authorised push payment fraud,
where a scammer tricks someone into sending them a payment, is
widespread. According to UK Finance, at least 196,000 consumers
lost a total of £583 million to these scams in 2021.
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