The Payment Systems Regulator (PSR) has proposed to reduce the planned amount that fraud victims are entitled to reclaim from their banks from £415,000 to £85,000, in a move that has met with consternation from consumer group Which?
The regulator is conducting a consultation on its decision to reduce the threshold for reimbursements, with new rules designed to protect fraud victims due to come into force on 7 October.
It had previously argued that capping reimbursements at £85,000 would be “too low, since they would exclude a significant number of victims” in a report published last August, adding: “There would be significant harm to those victims defrauded above this amount.”
The new protections for scam victims are being introduced in light of a significant rise in authorised push payment (APP) fraud, in which consumers are tricked into sending money to bogus accounts operated by criminals. According to UK Finance, APP fraud cost consumers £459.7m last year.
Which? described the PSR’s plans to reduce the reimbursement threshold as a ‘screeching U-turn’ brought about by pressure from payment firms.
Rocio Concha, Which? Director of Policy and Advocacy, said: “The PSR’s report is clear – victims of high-value fraud, such as investment scams and house purchases, stand to have their lives destroyed by this screeching U-turn. Yet somehow the regulator’s conclusion is that these people should be abandoned to provide a small benefit for parts of the finance industry that have been warned over their role in facilitating financial crime.
“Having previously ruled out a lower threshold because there would be ‘significant harm to victims’, the PSR has caved in to pressure from payment firms and ministers and dropped the crucial principle that a higher reimbursement limit gives the finance industry strong incentives to invest in improved fraud security measures, which could have disastrous consequences for victims.
“The regulator must stick to its original plan for a £415,000 limit to protect victims of high-value scams. If this government is serious about fighting fraud, it must support the implementation of the new reimbursement scheme in full and on 7 October.”
The PSR’s Managing Director, David Geale, commented: “We listened to concerns about the reimbursement limit and committed to collecting more evidence to inform our approach. As a result, we are now consulting on a limit that still covers the vast majority of authorised push payment scams and strikes the right balance. Under our proposals, consumers in the UK will still receive world-leading protection, payment providers will still be heavily incentivised to improve anti-fraud protections and we maintain effective market competition and innovation.”
The PSR’s consultation on its decision closes on 18 September.
