Consultation on CHAPS APP scam reimbursement requirement closes

The Payment Systems Regulator (PSR) consultation CP24/8 on a CHAPS authorised push payment (APP) scam reimbursement requirement closed on 31 May 2024, and the regulator has published its response¹. The PSR is proposing to direct banks and other payment firms participating in CHAPS to reimburse customers who have been victims of APP scams, a direction that would underpin the Bank of England's new CHAPS reimbursement rules¹.

The PSR set out its policy for APP scam reimbursement over the Faster Payment System (FPS) in June 2023, describing FPS as "the system over which the majority of these scams happen"¹. Those FPS protections come into effect from 7 October 2024¹. In December 2023 the PSR said it would support the Bank of England as it introduces similar requirements for CHAPS, so that consumers have consistent protection across two major UK payment systems and firms are incentivised to tackle scams, reducing the likelihood of criminals switching from FPS to CHAPS because of differences in firms' defences¹.

The consultation page also carries a draft cost benefit analysis, a draft CHAPS Compliance Data Reporting Standard (CCDRS) and the Bank of England's draft CHAPS reimbursement rules¹. The CCDRS specifies the data and information that all payment service providers will be required to collate and retain for the Bank to monitor compliance effectively¹. Comments on the Bank's draft rules were to be sent directly to the Bank by 5pm on 31 May 2024¹.

A separate PSR consultation, CP24/3, on compliance and monitoring for the FPS reimbursement requirement closed on 28 May 2024, with a response published². That document set out proposals for all in-scope payment service providers to report data and information to Pay.UK, the operator of Faster Payments, which will monitor compliance with the FPS reimbursement rules². The PSR proposed requiring firms to use Pay.UK's reimbursement claim management system to collate, retain and provide data, and proposed phased reporting from the policy start date². The start date for the FPS reimbursement policy is 7 October 2024².

Why it matters for households

APP scams are cases where someone is tricked into sending money to a fraudster, and the rules being finalised determine whether the bank or payment firm must refund the victim. Under the FPS policy, reimbursement protections take effect from 7 October 2024¹. The CHAPS proposal would extend equivalent protection to payments made over CHAPS, with the PSR proposing the same 7 October go-live date so that victims get the same protection across both systems¹. Until the specific direction is finalised, the CHAPS requirement is a proposal rather than a settled rule; the PSR says it expects to finalise and publish the direction in September 2024¹. The sources do not set out the reimbursement limits, excesses or eligibility detail for CHAPS, and no figures for expected claim volumes or costs have been reported here.

What happens next

The PSR says that after considering consultation responses it expects to finalise and publish the specific direction in September 2024, ahead of the proposed 7 October 2024 go-live date¹. The FPS reimbursement policy also starts on 7 October 2024, with Pay.UK responsible for monitoring directed firms' compliance². More on how refunds work is in the guide to scams and fraud.