Specific Direction 21 issued for CHAPS APP scam reimbursement

The Payment Systems Regulator (PSR) published Specific Direction 21 on 6 September 2024, requiring payment firms that participate in CHAPS to reimburse customers who are victims of authorised push payment (APP) scams¹. The direction underpins the Bank of England's CHAPS reimbursement rules, which the PSR said come into effect on the same date¹.

The policy start date is 7 October 2024, which the PSR said is "aligned with the date that the Bank's CHAPS reimbursement rules will come into effect, and the Faster Payments reimbursement policy start date"¹. The PSR said this alignment is intended to deliver consistent protections for CHAPS consumers as soon as possible and to reduce the risk of fraud migrating from Faster Payments to CHAPS¹.

Under the direction, all in-scope payment service providers (PSPs) must register in line with the CHAPS reimbursement rules as soon as practicable and no later than 7 October 2024¹. The PSR said this registration requirement applies only to PSPs not already required to register, or not already registered, with Pay.UK under Specific Direction 20, which covers directed PSPs in relation to Faster Payments, so that in-scope firms are only required to register once¹.

The PSR also set out the compliance and monitoring metrics PSPs must report to the Bank of England monthly, which may be shared with the PSR so it can monitor compliance with SD21¹. These are aligned with the confirmed metrics for Faster Payments, with one difference: PSPs are not required to submit nil returns to the Bank where they have received no APP scam claims in the relevant reporting period¹.

The PSR consulted on the proposal to direct banks and other payment firms participating in CHAPS in May 2024¹. The policy statement confirms the approach, summarises responses to the consultation and sets out the PSR's views on points raised by respondents¹. The PSR said the proposed rules, the approach consulted on and SD21 are aligned with its approach for Faster Payments¹. The document is relevant to the payments industry, consumer groups, payment service providers and prospective qualifying customers who use CHAPS to send money¹.

Why it matters for households

People who send money by CHAPS and are tricked into paying a fraudster will be covered by the reimbursement requirement from 7 October 2024, the same date the Faster Payments policy starts¹. Before that date, CHAPS transfers sat outside the Faster Payments reimbursement arrangements. The maximum refund for authorised push payment fraud and the process for claiming a refund from your bank after a push payment loss are set by the underlying rules rather than by SD21 itself, and the sources here do not restate those figures for CHAPS. Firms in scope must be registered by 7 October 2024, and those that are not already registered with Pay.UK under SD20 must register with the Bank of England¹. Monthly reporting to the Bank begins under the confirmed metrics, with no nil returns required where no claims were received¹.

What happens next

The reimbursement requirement and the registration deadline both take effect on 7 October 2024¹. Monthly compliance and monitoring reporting to the Bank of England follows, and that information may be shared with the PSR to monitor compliance with SD21¹. The PSR has not reported any further steps beyond these in the documents published on 6 September 2024¹.