Scam reimbursement: pushing for
a better solution - Treasury Committee report
Conclusions and recommendations
Authorised Push Payment Fraud
- Pay.UK is an industry body. Its role in authorised push
payment fraud reimbursement proposed by the Payment Systems
Regulator has inherent conflicts of interest. These are
particularly acute where Pay.UK is responsible for ensuring that
the banks and building societies that are its own guarantors pay
out large sums of money in reimbursement to consumers. (Paragraph
23)
- We are concerned that the Payment Systems Regulator’s current
position, confident that its proposals will work well but
reserving the right to react with direct intervention if they do
not, ignores the extent to which Pay.UK is conflicted. (Paragraph
24)
- The PSR’s intention to require Pay.UK to use scheme rules to
implement APP fraud reimbursement creates an opportunity for
guarantors and other PSPs—some of which oppose reimbursement—to
delay its implementation, including through influencing the
Pay.UK board. (Paragraph 31)
- Pay.UK is less well-equipped than the PSR to deliver
mandatory reimbursement quickly. Pay.UK requires a consensus of
its members to change its scheme rules, whereas the PSR can
exercise its powers of direction unilaterally. Pay.UK also lacks
effective regulatory tools to ensure the swift compliance of
PSPs. If the PSR leaves these proposals in the hands of Pay.UK it
risks losing control of its timetable and increases the
likelihood that mandatory reimbursement—which has already been
unacceptably delayed until 2024—could be delayed yet further.
(Paragraph 32)
-
Victims of APP fraud have been waiting more than long
enough. The PSR should ensure the payment systems industry has
fully implemented mandatory APP fraud reimbursement by the end
of 2023. The PSR should provide quarterly updates on progress
against that deadline to the Sub-Committee. (Paragraph 33)
- 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. (Paragraph 42)
- The Financial Services and Markets Bill, as introduced to the
House of Lords, instructs the PSR to use:
- its powers under section 54 of the Financial Services
(Banking Reform) Act 2013 (the Act) to direct payment system
participants;
- its powers under section 55 of that Act to require Pay.UK
to make rules; or
- a combination of the two
to provide for the reimbursement of Faster Payments APP fraud
victims. The PSR’s current proposal of using section 55 powers
alone is a recipe for non-compliance and delay. Mirroring the
PSR’s approach to Confirmation of Payee protections, making
directions to payments service providers supported by detailed
scheme rules, is more conducive to effective and timely progress.
(Paragraph 43)
8. The PSR’s proposal to delegate the mandatory reimbursement of
APP fraud victims to Pay.UK through Faster Payments scheme rules
is fundamentally flawed on three grounds:
- Pay.UK is an industry body and is inherently conflicted;
- it is conducive to further delay to an already unacceptably
extended process; and
- Pay.UK lacks the enforcement powers of a regulator.
(Paragraph 44)
9.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. (Paragraph 45)
