PSR consults on requiring full reimbursement of APP scam victims over Faster Payments

The Payment Systems Regulator (PSR) has published a consultation on a proposal to require all payment service providers (PSPs) sending payments over Faster Payments to fully reimburse victims of authorised push payment (APP) scams, with only limited exceptions¹. The proposal would split reimbursement costs equally between the sending and receiving PSPs, with a default 50:50 split¹. The consultation was published alongside the PSR's policy statement PS22/3 on extending Confirmation of Payee coverage, dated October 2022¹.

The PSR said the reimbursement proposal formed part of its wider work on APP scam protection. In the policy statement it noted: "We recently published our consultation on our proposal to require all PSP sending payments over Faster Payments to fully reimburse APP scam victims, with only limited exceptions"¹. The policy statement itself concerns a separate but related measure: a direction requiring around 400 PSPs to implement a system offering the Confirmation of Payee (CoP) name checking service to their customers, both as payers and payees¹.

Under that direction, PSPs are split into two groups with different deadlines:

The PSR said prioritising Group 1 would increase CoP coverage from 92% of Faster Payments transactions to 99% after October 2023¹. It said seven of the 46 PSPs listed in Group 1 had delivered CoP, and that these would be removed from the Group 1 list, meaning 32 PSPs would now be directed under Group 1¹. In total, 59 PSPs now offer CoP, the PSR said¹. The consultation on the draft direction ran for six weeks, closing on 8 July, and received 52 responses from a range of sectors¹.

The PSR said it would ask directed PSPs to submit data during spring 2023 and would publish the first set of data in summer 2023¹.

Why it matters for households

APP scams happen when someone is tricked into making a payment to an account controlled by a fraudster¹. The PSR's reimbursement proposal, if confirmed, would mean that people who lose money this way over Faster Payments would be reimbursed in full, with only limited exceptions, and that the cost would be shared equally between the bank or firm sending the payment and the one receiving it¹. The PSR has not reported the outcome of that consultation, so the final rules, their start date and the exact scope of the exceptions have not been reported¹.

Separately, the Confirmation of Payee direction affects when people can check that the name on an account matches the details they are given before setting up a new payment¹. CoP lets people check that the name on the account matches the details when they set up a new payment¹. The PSR said some evidence showed CoP had helped curtail the increase in some types of APP scams, reduced levels of fraudulent funds received into accounts at PSPs that had implemented it, and reduced accidentally misdirected payments¹. Group 1 PSPs must have and use a CoP system with send and respond capability after 31 October 2023, and Group 2 PSPs after 31 October 2024¹.

What happens next

The PSR said it would ask directed PSPs to submit data during spring 2023 and would publish the first set of data in summer 2023¹. The outcome of the consultation on full reimbursement of APP scam victims over Faster Payments has not been reported¹.