PSR increases reimbursement time limit from 48 hours to five business days

The Payment Systems Regulator (PSR) has set out a new reimbursement requirement for authorised push payment (APP) fraud within the Faster Payments system, publishing its policy statement in June 2023¹. Sending payment firms must reimburse customers within five business days, after the regulator replaced its proposed 48-hour time limit with a longer deadline and a "stop the clock" provision¹.

The PSR said it had listened to consultation responses on the deadline. "We agree with the arguments presented and have increased the time limit to five business days with a 'stop the clock' provision," it said¹. The stop the clock provision allows a sending firm to pause the five-day countdown to gather additional information from victims to assess a claim, and there is no limit to how many times a firm can use it¹.

The requirement will apply to Faster Payments authorised after the regulatory requirement comes into force in 2024¹. The PSR said it will consult on a specific start date alongside draft legal instruments in early Q3 2023¹. It covers more than 1,500 payment service providers, which the PSR said gives significantly wider coverage within Faster Payments than the Contingent Reimbursement Model (CRM) Code, launched in 2019 as good industry practice¹.

Key elements of the policy include:

The PSR said the customer standard of caution and any claim excess must not be applied to vulnerable customers¹. It also said failure to notify the police cannot be considered a reason for denying a reimbursement claim¹. The regulator reported that in 2022 there were around 207,000 reported APP fraud cases on personal accounts, an increase of 6% on 2021, with losses totalling £485.2 million¹. It said 66% of APP fraud losses within scope of the CRM Code were reimbursed to the victim in 2022¹.

Why it matters for households

People who are tricked into sending a payment to a fraudster's account will have a right to reimbursement from their own payment firm, rather than depending on the voluntary CRM Code that covered only some firms¹. The change reaches customers of high street banks, building societies and smaller payment firms within Faster Payments¹. The five business day deadline applies from when the requirement takes effect in 2024, and the clock can be paused while a firm gathers information from the victim¹. Claims can be refused where the customer acted fraudulently or with gross negligence, but not for failing to report the matter to the police¹. The PSR has not yet set the claim excess or the maximum level of reimbursement; both are subject to consultation, with guidance due in Q4 2023¹. Additional guidance on the customer standard of caution is also due in Q4 2023¹.

What happens next

The PSR will consult on a specific start date for the requirement alongside draft legal instruments in early Q3 2023¹. It will consult on the appropriate maximum value for APP fraud claims and on the appropriate level for a claim excess, publishing both in PSR guidance in Q4 2023¹. Guidance on the customer standard of caution is also to be published in Q4 2023¹. The PSR has set a deadline of 1 July 2026 to complete migration to new, competitively procured Faster Payments infrastructure¹. Separately, the FCA's Consumer Duty comes into force on 31 July 2023 for new and existing products or services open for sale or renewal¹.