UK banks to reimburse customers falling for scams

According to the regulator, banks must reimburse payments exceeding GBP 100 (approximately USD 107) in authorised push payment APP scams. The maximum claim is GBP 100 million per payment, though many banks imposed lower limits, with the time limit on claims not exceeding 13 months.

Scams on the rise

PSR stated that bank consumers lost around GBP 583 million in APP scams in 2021 alone, up by 39% from the previous year, in what seems to have become Britain’s largest type of payment fraud. To better fight fraudsters and raise awareness among bank clients, the UK regulator plans to introduce a new rule after the parliament expands the powers of the PSR. With the new parliament aiming to give more power to the PSR expected to happen in the first half of 2023, the regulator plans to implement the new rule by 2024.

A statement issued by the PSR claims that consumers still need to take caution when sending payments, but bigger payments will be automatically protected, with the bank from which the money was sent to split the reimbursement costs between it and the fraudster receiver’s bank. Moreover, processing costs and fees charged to customers most not exceed GBP 35.

Some of the banks that will be affected by the new rule include HSBC, Natwest Group, Lloyds, Barclays, and Banco Santander, which are also UK’s largest commercial banks by the number of actives and customers.

 

More protection for customers

To keep customers on the loop with how protected they are in terms of fraud, the PSR plans to also publish data on how the country’s top 25 banks are reimbursing customers based on their levels of fraud. 

Currently, less than 50% of bank customers are reimbursed for APP scams and most of these bills fall into the responsibility of the sending bank. By implementing the new set of rules, the PSR aims to cover around 95% of all bank users to have their assets protected in case of APP scams.

Several banks have already taken the first steps into compliance, by agreeing to check names of the person being paid by a money transfer between banks.