Following on from our previous article on the mandatory reimbursement framework for victims of authorised push payment fraud (APP) (see here), the Payment Systems Regulator (PSR) confirmed on 25 September the new cap for the maximum level of reimbursement for victims of APP fraud.
Specifically, following additional evidence provided by the industry and the FCA, the PSR have now set the maximum liability amount at £85,000. This now brings the cap in line with the Financial Services Compensation Scheme (FSCS) limit. This represents a significant change in the proposed cap amount as the previous maximum reimbursement value had been set at £415,000, in line with the Financial Ombudsman maximum reimbursement limit at that time.
According to the PSR, the newly proposed cap will provide ‘world-leading protections’ to people who fall victim to scams by seeing over 99% of claims (by volume) covered under the new cap. The PSR also expects that the newly proposed cap will incentivise PSPs to make improvements to their fraud prevention controls and mechanisms.
The PSR have noted that they will keep the new lower cap under consideration through their post-implementation review.
On a separate note, earlier in September, the PSR published their policy statement and Specific Direction 21 (SD 21), expanding APP scam reimbursement to consumers of CHAPS. The proposed APP fraud rules and SD 21 have been aligned with the PSR’s approach outlined previously in connection with the APP fraud reimbursement framework for participants to the Faster Payments System (FPS). Key features of the new rules include the following:
Our Payment Services Regulatory team will be monitoring next steps and shall keep you up-to-speed with the latest developments on the mandatory reimbursement framework.