PSR to publish claim excess and reimbursement cap by end of 2023

The Payment Systems Regulator (PSR) will publish the claim excess, the maximum level of reimbursement, additional guidance on the customer standard of caution (gross negligence) and all legal instruments by the end of 2023, under the timetable set out for its mandatory reimbursement scheme for authorised push payment (APP) fraud¹. The new reimbursement requirement comes into force in 2024¹.

The rules will require all payment service providers (PSPs) using Faster Payments to meet minimum standards for reimbursement, applying to over 1,500 PSPs, described as a big step up from the 10 banks and building societies signed up to the voluntary CRM Code¹. The cost of reimbursing victims will be shared 50:50 between sending and receiving payment firms, and sending PSPs must reimburse customers within five business days¹. Firms can reject fraud claims submitted more than 13 months after the final payment to the fraudster, and plans for a £100 minimum threshold have been removed¹. Firms will not reimburse customers who have acted fraudulently (first-party fraud) or with gross negligence, which is described as a high bar with the burden of proof on the PSP; customers deemed vulnerable to a specific type of APP fraud are not subject to the gross negligence test or claim excess¹.

The PSR has said it intends to consult further on details such as the allowable claim excess that payment providers can charge victims and the maximum cap on reimbursement¹. The voluntary CRM Code requirements are expected to stay in place until the new reimbursement requirement comes into force¹.

The reimbursement requirement does not currently apply to international payments, payments across other payment systems such as card payments, cryptocurrency transfers and CHAPS transactions, or "on us" payments where the fraudster uses an account provided by the victim's own PSP¹. The PSR said work is underway to consider whether the new reimbursement requirement, or equivalent protections, should apply to other payment systems, and that firms should reimburse APP fraud in the same way as Faster Payments¹.

Why it matters for households

Victims lost £485.2m to APP fraud in 2022, and only 59% of those losses were returned to victims, either through direct refunds or recovery by the receiving bank¹. Under the new rules all fraud losses will be reimbursed other than in exceptional circumstances¹. The level of the claim excess and the maximum reimbursement cap are not yet known; both are due to be published by the end of 2023¹. The PSR will be able to direct firms to reimburse fraud victims under the Financial Services and Markets Bill, which was expected to receive Royal Assent in 2023¹. The maximum refund for authorised push payment fraud and the claim excess are the two figures still outstanding. The Payment Systems Regulator sets the rules, and authorised push payment reimbursement explains how bank transfer refunds work.

What happens next

The PSR is due to publish the claim excess, the maximum level of reimbursement, the gross negligence guidance and all legal instruments by the end of 2023, with the reimbursement requirement taking effect in 2024¹. The Government has said it is also looking at how to enable banks to identify and pause suspicious payments in flight where appropriate¹.