Draft v0.7 of APP reimbursement scheme rules approved for PSR consultation

Pay.UK approved the final draft of the APP Reimbursement Scheme Rules for Faster Payments (FPS) on 26 September 2023, for consultation by the Payment Systems Regulator. The document, Schedule 4 to the FPS rules, is at version 0.7, according to its version history, which records "0.7 26/09/2023 Final draft approval by Pay.UK Exec for PSR consultation"¹.

The rules are drafted under a requirement by the PSR using its powers under section 55 of the Financial Services (Banking Reform) Act 2013, and the requirement that payment service providers comply with the schedule is directed by the PSR under section 54 of the same Act¹. The schedule applies to any directed PSP or indirect access provider, whether or not they are a member of Faster Payments and party to the FPS rules¹. It is incorporated into and forms part of the FPS rules¹.

Under the draft, if a victim submits details of a reimbursable APP scam payment to their sending PSP, the sending PSP must pay the reimbursable amount to the victim; if the sending PSP submits details of that payment to the reimbursement scheme, the receiving PSP must pay the reimbursable contribution to the sending PSP¹. The sending PSP must conduct an assessment and pay any reimbursable amount within five business days, a period that can be extended only by as many business days as are necessary to obtain specified further information¹. The receiving PSP must pay the contribution within an "ultimate backstop time period TBD by Pay.UK"¹.

Several figures are left to be set. The sending PSP may deduct anything above a maximum level, and may decline to pay the first part of a payment, both marked "TBD by the PSR"¹. The reimbursable contribution is the lesser of 50 per cent of the reimbursable amount and a maximum level also to be set by the PSR, minus 50 per cent of any excess the sending PSP could have declined to pay¹. The obligation to comply commences on a date in 2024 that is still to be determined¹.

The draft sets out who and what is covered:

Element	Draft provision
Consumer	Individuals, microenterprises (fewer than ten employees and annual turnover or balance sheet total not exceeding £2 million) and charities with annual income under £1 million¹
Notification deadline	Sending PSP must have been notified within 13 months of the payment¹
Payment account	Executed by the sending PSP from a payment account located in the UK¹
Business day	Excludes Saturdays, Sundays, Christmas Day, Good Friday and bank holidays in any part of the UK, but not the Channel Islands or the Isle of Man¹

A payment counts as a reimbursable APP scam payment only if the sending PSP determines, among other conditions, that the consumer standard of caution exception does not apply or the victim was a vulnerable consumer at the time, that the victim is not party to the fraud, is not claiming fraudulently or dishonestly, is not claiming an amount subject to a civil dispute or other civil legal action, and is not claiming an amount paid for an unlawful purpose¹.

"This Schedule 4 has been drafted pursuant to a requirement by the Payment Systems Regulator (the PSR), exercising its powers under section 55 of the Financial Services (Banking Reform) Act 2013 (FSBRA), that the Company amend its rules."

Pay.UK, APP Reimbursement Scheme Rules for FPS, Schedule 4 draft v0.7¹

Why it matters for households

The draft concerns people who are tricked into sending money by bank transfer, known as authorised push payment scams, and who hold a payment account with a sending PSP in the UK. It also covers microenterprises and charities within the definitions above¹. The rules would replace the voluntary arrangements under the Contingent Reimbursement Model Code with a requirement directed at PSPs by the Payment Systems Regulator¹.

The practical effect depends on figures the draft leaves blank. The maximum level above which a sending PSP may deduct, the excess it may decline to pay, and the cap on the receiving PSP's contribution are all marked to be determined by the PSR, and the start date is given only as a month in 2024¹. Until those are set, the amount a victim could recover, and the split between the two PSPs, cannot be stated from the draft. The draft also allows a sending PSP to decline to pay the excess unless the victim was a vulnerable consumer at the time the payment was authorised¹.

What happens next

The version history records that version 0.7 was approved by the Pay.UK executive for PSR consultation on 26 September 2023¹. The document states that the schedule can be amended by Pay.UK only under a direction or requirement by the PSR, except for amendments that are exclusively administrative or technical¹. The dates of the section 55 requirement and the section 54 direction are both marked as to be confirmed, as is the commencement date¹. The outcome of the consultation has not been reported in the document.

Sources1 cited