Government plans new APP scam reimbursement regulation

The government plans to introduce new regulation on reimbursement for authorised push payment (APP) scam victims, following a reported 40 per cent rise in APP fraud¹. The plan was reported in a monthly round-up of UK financial news published on 5 July 2022, covering developments in June 2022¹.

APP fraud is described as a scam where criminals pretend to be someone the victim knows¹. The same round-up states that ministers also plan to overhaul consumer credit legislation¹.

The round-up also covers the Financial Services and Markets Bill, described as the most important bill in the Queen's Speech and a collection of financial regulation changes¹. It reports that the Treasury Select Committee has warned against an "international competitiveness" mandate for the UK's financial regulators, which is embedded in the Bill¹.

Separately, the round-up reports that regulators are going to introduce capital rules for crypto¹, and that the Bank of England's climate stress tests show the financial services industry will lose hundreds of billions more if climate action comes too late¹. It also notes the first strategic plan from the new UK Infrastructure Bank¹.

On buy now pay later, the round-up says the government plans to regulate the sector, but quotes Martin Lewis saying it is taking far too long, particularly as one-third of users already cannot afford repayments¹. It adds that ministers are watering down audit reforms¹.

The government's own approach to APP scam reimbursement is cited in the round-up as a publication setting out its position¹. The specific reimbursement requirements, the date they take effect and which firms they cover are not set out in the round-up and have not been reported here.

Why it matters for households

APP fraud happens when someone is tricked into sending money from their own bank account to a criminal's account, typically by someone posing as a person or organisation they trust¹. Because the payment is authorised by the customer, the refund position differs from unauthorised transactions, where different rules apply. The practical effect of any new reimbursement regulation would fall on people who lose money this way, and on the banks and payment firms that would handle claims.

The reported 40 per cent rise in APP fraud¹ indicates more households were affected over the period covered. The round-up does not state the value of losses, the number of victims, or how a reimbursement scheme would be funded or capped. Those details have not been reported in the material cited here.

The buy now pay later element is separate but related to household borrowing: the round-up cites research that one-third of users already cannot afford repayments¹, and reports government plans to regulate the sector alongside an overhaul of consumer credit legislation¹.

What happens next

The round-up does not set out a timetable for the APP reimbursement regulation, nor for the consumer credit overhaul¹. It reports that the Financial Services and Markets Bill was the most important bill in the Queen's Speech¹, but gives no dates for its stages. No commencement date for the reimbursement rules has been reported here.