UK reportedly poised to slash amount banks must refund to fraud victims

The regulator said to be planning cut to the maximum amount available to victims from £415,000 to about £85,000

The UK is reportedly poised to slash the planned maximum amount that banks will have to refund to fraud victims – from £415,000 to about £85,000 – after strong lobbying from lenders, fintechs and some politicians.

Fraud in the UK payments industry has soared in recent years, with a sharp rise in authorised push payment (APP) scams, which often involve email accounts being hacked to trick people into sending money to bank accounts operated by criminals. Measures were announced last year requiring banks and payment firms to reimburse those scammed.

At the end of last year, the Payment Systems Regulator (PSR) said it was “leading the way globally” on combatting APP fraud and could confirm “the maximum level of reimbursement per claim will be set at £415,000”, with the new regime coming into force on 7 October 2024.

But as that date has got nearer, there have been reports that the measures have prompted concern within the former Conservative and current Labour governments, and that dozens of companies have been lobbying the regulator to slash the £415,000 threshold and delay the changes to give firms more time to prepare.

It is understood that an announcement from the PSR is due to be made on Wednesday, and on Tuesday the Financial Times reported that the regulator was to dramatically scale back its measures. The FT said the new maximum fraud payout was now expected to be set at £85,000.

Consumer groups and others have been eagerly awaiting the regime’s October start date and the higher threshold, and any decision to cut it after lobbying by banks is likely to trigger a major row.

The PSR previously conceded: “The maximum level of reimbursement has attracted a particularly high level of feedback, and involves difficult trade-offs”, and it “may consult on revising the level ahead of October if there is convincing evidence to do so”.

Last week the PSR said on LinkedIn that in a few days’ time it was planning to publish a number of documents on APP scams, including “the outcome of our pre-implementation review of high-value claims”.

Source: The Guardian