Banks handed new rules over having to refund fraud victims in u-turn

Banks handed new rules over having to refund fraud victims in u-turn
-Credit: (Image: Reach Publishing Services Limited)


The UK payments regulator has confirmed a last-minute U-turn on the maximum amount banks will have to reimburse fraud victims under a new regime. After announcing a two-week consultation on 4 September, the Payment Systems Regulator (PSR) said on Wednesday that firms will now have to refund victims of authorised push payment (APP) fraud up to a limit of £85,000 per claim from 7 October.

This cap is down from £415,000. “This was a carefully balanced decision – which provides significant protection to fraud victims and strikes an appropriate balance having regard to the PSR’s innovation and competition objectives and making sure that payment systems work well for everyone,” the PSR said.

The widely expected U-turn marks a major victory for trade bodies that had lobbied for an £85,000 limit since a consultation last August. “The regulator has shamefully sidelined scam victims, despite the evidence showing that this decision could have a negative financial and psychological impact on them,” said Rocio Concha, director of policy and advocacy at Which?

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“Instead, it caved into a lobbying campaign from some firms in the payments industry, some of which have already been warned by the FCA for their role in facilitating fraud.” In a review of 250,000 high-value scams, the PSR found 18 instances of people being scammed for more than £415,000 in 2023, and 411 instances of more than £85,000.

The economic regulator announced a consultation into the change earlier this month which lasted only a mere two weeks. The PSR found in a review of high-value scams that of more than 250,000 cases, there were 18 instances of people being scammed for more than £415,000 in 2023, and 411 instances of more than £85,000.

APP fraud has quickly become one of the most "significant" types of fraud in the UK accounting for nearly £460million in losses last year according to UK Finance.