Global: UK Payment Systems Regulator Proposes £415,000 Cap for APP Fraud Reimbursement Claims

The Payment Systems Regulator (PSR) in the UK is considering implementing a maximum reimbursement cap of £415,000 for victims of authorised push payment (APP) fraud.

The PSR, which finalized its stance on addressing APP fraud in June, intends for the vast majority of victims to be reimbursed within five days of reporting the fraud to their bank.

Before the new regulations take effect next year, the PSR is soliciting feedback on the maximum level of reimbursement, claim excess, and the consumer standard of caution.

Under the proposed standards, customers are expected to heed their bank’s scam warnings, report fraudulent payments within 13 months of the last incident, and provide necessary information for assessing reimbursement claims. Reimbursement may not apply if the consumer is deemed “grossly negligent” in meeting these standards, though the PSR states that this standard would apply only in a minority of cases. Gross negligence wouldn’t apply when a victim’s vulnerability plays a role in their fraud.

The PSR is also seeking input on structuring a claim excess applied to the sending bank. This could be either a fixed amount, akin to an insurance claim excess, or a percentage of the reimbursement claim amount.

The regulator proposes that the maximum reimbursement level align with the prevailing Financial Ombudsman Service limit of £415,000 per claim, which covers roughly 98% of APP fraud incidents. The PSR is also seeking feedback on whether this maximum level should include vulnerable consumers.

The consultation is open for stakeholders’ responses until September 12, and the new reimbursement requirement is set to take effect in 2024.

Chris Hemsley, Managing Director at the PSR, remarked, “The changes we are delivering will bring a major shift in preventing fraud, increasing reimbursement for victims, and incentivising the banks to do more to help their customers.”