Following this announcement, the Payments Association has produced and shared a private Briefing Paper for the new interim MD to highlight multiple community concerns, as well as prioritise a proposal that would benefit from immediate attention in the run-up to the 7th of October implementation data of the APP Fraud laws.
The institution identified the proposed Faster Payments System (FPS) rule changes raise several serious concerns. According to the institution, if the current changes are implemented, the prudential risk and requirements to participate in the UK payments market and industry are expected to increase significantly, resulting in reduced competition and an overall increase in the unbanked population. In addition, it will also result in an increased cost and friction of real-time payments and an overall decrease in investments due to higher risks of failure and lower profitability.
In order to change this outcome, the Payments Association proposes the PSR make changes to the FPS. This includes the process of postponing the overall implementation by 12 months until after the Pay.UK case management system is fully operational and secure to leverage, despite resolution mechanisms being tested and the full rollout of Confirmation of Payee being completed.
This procedure takes place because Pay.UK lacks certain functionalities that are present in other global schemes, including remediation, exception handling, and a dispute resolution mechanism and technology. This can possibly increase the feasibility of implementing the APP fraud reimbursement scheme through Pay.Uk’s current framework by the 7th of October 2024, making it uncertain.
Included in other key areas of change presented is the PSR’s implementation of its APP Fraud Reimbursement rules. By postponing the initiative for 12 months, the industry will have the possibility to prepare for such a shift, as well as the overall involvement of the source of the APP scams (big tech) in the process of solving the problem with a one-ecosystem approach. In addition, this will also follow a recommendation by the Home Affairs Committee that strongly urges the Government to consider introducing a fraud levy on social media platforms and companies, funds of which can be used in order to compensate victims of fraud.
The Payments Association also called for changes to the regulation that is currently set, including the process of reducing the threshold to GBP 30.00 from GBP 415.00. In addition, a recommended mandatory reimbursement threshold of GBP 30.000 is still more than double the average scam for businesses, as well as 20x the average scam for clients.
In addition, the institution has called for the PSR to refocus on its original strategy of regulating payment systems, as well as to ensure fair access to secure payment systems at the lowest cost and least systemic risk. Specifically, the Payments Association mentioned that the PSR should focus more on its statutory objective to promote competition and prioritise the process of supervising Payment System Operators and market infrastructure.
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