The interim head of the UK Payment System Regulator has declined a request to postpone the implementation of a controversial fraud reimbursement plan.
Officials revealed that the Payment Systems Regulator (PSR) will proceed with new rules regarding compensation for authorised push payment (APP) fraud, which will come into effect in October. The decision follows the resignation of the previous PSR head amid criticism of the proposed regulations. The Payment Association had urged a one-year delay to ensure adequate policies, technology, and systems are in place to prevent lasting damage to the UK's payment sector. However, PSR officials emphasised the need for swift action to address APP fraud, which encompasses various scams resulting in significant financial losses to consumers.
Industry concerns about the proposed reimbursement changes, including potential adverse effects on smaller fintech firms, were raised in a letter addressed to City Minister Bim Afolami. Some members of the Payments Association advocated for setting the reimbursement threshold at GBP 30,000, highlighting the voluntary nature of reimbursement under current regulations.
While acknowledging industry apprehensions, officials affirmed the PSR's commitment to engaging with stakeholders and supporting them in implementing the necessary measures for compliance. The trade body suggested that delaying the rules would allow for greater involvement of tech and social media companies in the reimbursement process.
Despite reservations from industry and consumer groups, UK Finance indicated that its members are actively preparing for the October deadline. However, according to the Financial Times, concerns persist regarding the potential for increased fraudulent activity if the proposed changes are enacted without sufficient safeguards in place. Representatives from Which? cited by the same source criticised the Payment Association's request, urging payment companies to prioritise customer protection against fraud rather than seeking to evade responsibility.
According to UK Finance, Britons lost approximately GBP 459.7 million to APP fraud in 2023, with most incidents originating online. Forbes revealed that a total of 232,429 cases were reported to UK Finance by financial services providers, marking a 12% increase compared to 2020. UK Finance officials said that the increase of purchase scams, which totalled 77,000 cases in the first half of the year, was partly behind the rising figures.
However, the same source indicates that an increase in the reporting of APP-related fraud may also account for the increase in figures. Representatives from the Payment Systems Regulator highlighted a growing awareness around consumer protection which gives victims greater confidence about how they’ll be treated if they report the scam, which makes them more likely to do so.
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