PSR consultation on mandatory APP scam reimbursement closes

The Payment Systems Regulator (PSR) closed its consultation CP22/4 on requiring reimbursement for victims of authorised push payment (APP) scams on 25 November 2022, and published its response¹. The consultation set out proposals that would put mandatory reimbursement in place for all online and mobile payments¹.

APP scams happen when fraudsters trick someone into sending a payment to a bank account controlled by the fraudster¹. In 2021, losses to APP scams totalled £583.2 million, a 39% increase on the previous year¹.

The measures proposed in the consultation included requiring reimbursement in all but exceptional cases, improving the level of protection for APP scam victims so there is greater consistency irrespective of who they bank with, and incentivising banks and building societies to prevent APP scams¹. The PSR said responsibility for allowing fraudulent payments sits with both the sending and receiving banks or building societies¹.

On the specific terms, the PSR proposed that reimbursement would be on all payments over £100 and subject to an excess of no more than £35¹. It said it wanted to see the requirements for mandatory reimbursement in place for consumers as swiftly as possible, and that the consultation would ensure it could make the necessary regulatory changes as soon as the law has been changed¹.

The PSR also set out a wider set of changes alongside the reimbursement proposals¹:

The PSR described Confirmation of Payee as the name checking service designed to help prevent APP scams and misdirected payments¹. Chris Hemsley, the PSR's Managing Director, outlined the proposals in a video published with the consultation¹.

Why it matters for households

APP scams involve a person being tricked into authorising a payment themselves, which is why the question of who refunds the money has been contested. The proposals would apply to payments over £100, with an excess of no more than £35, meaning a victim of a scam above that threshold would bear at most £35 of the loss under the proposed terms¹. The PSR said the measures were intended to give greater consistency in protections for all victims, irrespective of who they bank with¹.

The scope described in the consultation covers online and mobile payments, and the Confirmation of Payee element would extend coverage from around 90% of transactions to almost all payments made by FPS and CHAPS¹. The PSR said the requirements could only be put in place once the law had been changed¹. The consultation document was aimed at the payments industry, consumer groups and payment service providers, particularly those already involved in the PSR's work on APP scams¹.

What happens next

The PSR said it would consider all the responses it received to help shape its next steps¹. It also said it wanted to see the requirements for mandatory reimbursement in place for consumers as swiftly as possible, and that the consultation would allow it to make the necessary regulatory changes as soon as the law has been changed¹. The wider measures include the publication of data on how well firms are protecting customers from summer 2023¹.