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UK regulator proposes reducing bank payout cap for fraud victims

Thursday 5 September 2024 11:42 CET | News

British regulators have proposed banks and payment companies in the UK may only need to compensate fraud victims up to GBP 85,000 instead of the expected GBP 415,000 limit. 

 

The Payment Systems Regulator (PSR) announced a 14-day consultation on the lower cap after a review revealed that only 18 out of more than 250,000 cases involved losses over GBP 415,000, while 411 cases exceeded GBP 85,000. 


The PSR's proposal, set to take effect on October 7,2024, aims to establish a reimbursement system for authorised push payment (APP) fraud. This comes amid concerns from the industry that a higher compensation cap could encourage criminal gangs and put smaller businesses at risk. 

British regulators have proposed banks and payment companies in the UK may only need to compensate fraud victims up to GBP 85,000 instead of the expected GBP 415,000 limit.

Scam cases up, regulator proposes reduced fraud payout 

APP fraud resulted in losses of around GBP 460 million in 2023, a 5% decrease from 2022. However, the number of scam cases increased by 12% to 232,429, according to UK Finance data. Currently, banks and payment companies voluntarily reimburse APP fraud victims, with TSB compensating 88% of cases last year, while Ireland’s AIB refunded only 9%, according to the PSR. 

A formal reimbursement system is intended to encourage the industry to invest more in scam prevention, improving customer protection and building consumer trust. Banks had pushed for a lower cap, citing concerns about "complicit fraud," where criminal gangs impersonate victims to claim compensation. 

In December, the PSR acknowledged the feedback on the initial proposed cap, recognising the difficult trade-offs and indicating that a new consultation might be needed before the policy's October launch.  

Source: Link


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Keywords: APP fraud, fraud prevention, scam, payout, regulation
Categories: Fraud & Financial Crime
Companies:
Countries: United Kingdom
This article is part of category

Fraud & Financial Crime

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