Section 72 of the Financial Services and Markets Act 2023 comes into force

Section 72 of the Financial Services and Markets Act 2023, headed "Liability of payment service providers for fraudulent transactions", came into force on 29 August 2023¹. The commencement note records: "I1 S. 72 in force at 29.8.2023, see s. 86(2)(i)"¹.

The section places two duties on the Payment Systems Regulator. First, it must prepare and publish a draft of a "relevant requirement" for reimbursement in the cases it considers should be eligible¹. Second, it must impose such a requirement¹. A "relevant requirement" is defined as a requirement imposed by or under section 54 or 55 of the Financial Services (Banking Reform) Act 2013, or a combination of those sections¹.

A case counts as a "qualifying case" if it relates to a payment order executed over the Faster Payments Scheme and the order was executed subsequent to fraud or dishonesty¹. The Faster Payments Scheme is defined in the section as the payment system of that name designated as a regulated payment system under Part 5 of the Financial Services (Banking Reform) Act 2013¹.

The section sets deadlines measured from commencement. The draft must be published before the end of two months beginning with the day the section came into force, and the requirement itself must be imposed before the end of six months beginning with that day¹. The draft must be published in the way the Regulator considers best calculated to bring it to the public's attention, and must be accompanied by notice that representations may be made within a specified time¹. In imposing the requirement, the Regulator must have regard to any representations made⁴.

The section also states that nothing in its first eight subsections limits the Regulator's power to vary or revoke a requirement imposed under the duty, or to impose further requirements after that duty is complied with, in connection with reimbursement of payment orders executed subsequent to fraud or dishonesty¹. It amends regulation 90 of the Payment Services Regulations 2017 on liability for incorrect unique identifiers, adding that nothing in that regulation affects a payment service provider's liability under a relevant requirement where a payment order was executed subsequent to fraud or dishonesty¹.

Why it matters for households

The section concerns authorised push payment fraud, where a person is tricked into sending money by bank transfer, and the refund rules that follow from it. It applies to payment orders executed over Faster Payments, the system used for most everyday bank transfers, where the payment was made subsequent to fraud or dishonesty¹. The section itself does not set a refund amount, a deadline for claims or a date from which consumers receive refunds; it creates the duties under which the Regulator is to make rules. The two and six month deadlines run from 29 August 2023¹. The section does not change the separate position on unauthorised payments, and no figures for expected refunds appear in it.

What happens next

The draft requirement was due to be published before the end of October 2023, and the requirement imposed before the end of February 2024, both counted from 29 August 2023¹. The section allows the Regulator to vary, revoke or add to any requirement it imposes¹. No further commencement dates or rule details are set out in the section.