PSR completes review of protections for consumers making payments from one bank account to another 

  • Protecting people when they make payments will remain a key priority for the PSR in the coming years 
  • The PSR is confident most account-to-account payments are currently sufficiently protected, but more protection could be needed in the future as the use of bank transfers increases  

Today, the Payment Systems Regulator publishes its response following its call for views on consumer protection in interbank (account-to-account) payments.   

More and more of us are using digital payments to transfer funds directly from one bank account to another using interbank payment systems and particularly the Faster Payments Service (FPS). With recent innovation in interbank payments, the PSR wanted to be sure that existing consumer protections remain fit for purpose, particularly as the number of transactions processed by FPS is growing. It is expected to continue that way in the coming years. Part of that growth comes from new opportunities developed in Open Banking which allow consumers and businesses to use bank transfers for more varied purposes, including making retail purchases. 

As a result of its review, the regulator has decided that existing protections, particularly for payments that were unauthorised or were wrongly executed, are sufficient for now. For the time being, the PSR will not intervene to introduce additional purchase protection which isn’t yet provided for bank transfers.  

However, because the PSR expects interbank retail payments to become more popular over time, it is imperative that businesses offering these services can identify payment risk levels and act quickly and responsibly to minimise customer harm if risk levels for interbank payments start to rise. The PSR will be keeping a close eye on developments and intervene if necessary. This is supported by HM Treasury in its published response to its Payments Landscape Review.

Genevieve Marjoribanks, Head of Policy at the PSR said: 

“Innovative new payment methods and the protection available go hand-in-hand and our proposed strategy focuses on both. We expect new services to offer levels of protection that at the very least match the level of risk within the system and the needs of those making a payment. Businesses have a responsibility to act fast if they see their customers starting to lose money. 

“We will be keeping a close eye on how protections develop in FPS and, if we think we need to step in, we will.” 

Tackling other types of payment fraud 

While the PSR is satisfied that FPS protections are sufficient for most account-to-account payments for now, it recognises there has been a rise in fraud in other ways that people pay. This year, the PSR has been developing an approach to prevent authorised push payment (APP) fraud and reimburse the victims of these crime. The regulator will consult on its proposed next steps in its work on APP scams in October. 

The PSR strategy: 

In its proposed strategy, the PSR has identified four strategic priorities: 

  • ensure users have continued access to the payment services they rely on and support effective choice of alternative payment options 
  • ensure users are sufficiently protected when using the UK’s payment systems, now and in the future 
  • promote competition in markets and protect users where that competition is not sufficient, including between payment systems within the UK and in the markets supported by them 
  • ensure the renewal and future governance of the UK’s interbank payment systems supports innovation and competition in payments 

There are a number of actions the PSR will take to deliver these priorities. Some of the key actions proposed include:   

  • Promoting competition between payment systems so that, for example, in the future people may choose to use interbank payments (when a payment moves from one bank account to another, like an online transfer) to buy their groceries. Most people currently use card payments.  
  • Making sure that, as interbank payments develop (like in the example above), so do the consumer protections associated with them.   
  • Understanding and taking account of the perspective of vulnerable consumer groups towards new ways of paying and the choices available to them. 

More detail on the actions the PSR wants to take can be found in Chapter 4 of the future strategy document



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