New figures released today by the PSR show, for the first time, the full extent of how well banks and other payment firms performed in tackling APP scams and how they treated those who fell victim in 2022.
As part of sweeping measures to fight APP fraud, the PSR collected data on three key areas:
- Reimbursement to victims (from the largest 14 banking groups)
- How much money is sent from each payment firm as a result of APP fraud (from the largest 14 banking groups)
- How much money is received by each payment firm as a result of APP fraud (covering all payment firms in the UK)
The report provides the most comprehensive data published to date on APP scams and covers 95% of payments made via Faster Payments in the UK, by value and volume. The report focuses on Faster Payments because it is the most frequently used way that fraudsters carry out an APP scam. Though payments resulting from APP fraud represented less than 0.1% of overall Faster Payments volumes in 2022, Faster Payments were used for 98% of APP fraud payments.
The findings include the UK’s 14 largest banking groups, along with the data for ten other smaller firms that were in the top 20 highest receivers of fraud. The smaller firms are included as they represent a disproportionately high level of fraud received for their size.
Chris Hemsley, Managing Director of the PSR said:
“This is the first time we can see at an individual level how well banks and payment firms are dealing with APP fraud.
“This represents a substantial improvement in transparency. This provides better information for customers on how firms handle APP fraud and encourages these firms to take more action to tackle it.
“Our approach is working because we know there is a greater focus across many more firms on preventing fraud. Our commitment to transparency and the forthcoming mandatory rules are key to strengthening efforts to prevent these frauds from happening in the first place.
“Over the coming months, we will be bringing all payment firms into new reimbursement arrangements to give more consistent protection across the board. This is important because we can see from today’s report that this has not always been the case.”
The report shows the percentage of APP fraud cases that were fully and partially reimbursed by each firm.
By volume of cases (where there was full reimbursement):
- TSB fully reimbursed 94% of the APP scam cases reported to it, followed by Nationwide which fully reimbursed 91% of cases and Barclays which fully reimbursed in 79% of cases.
- Only 6% of cases reported to Monzo were fully reimbursed, while Danske Bank fully reimbursed 7%, and AIB fully reimbursed 12%.
By value of APP losses:
- TSB reimbursed 91% of APP fraud losses to customers in 2022. Nationwide reimbursed 78% and HSBC reimbursed 73% of APP fraud losses.
- AIB Group reimbursed 10% of APP fraud losses. Danske Bank reimbursed 20% of APP fraud losses. Monzo reimbursed 22% of APP fraud losses.
On banks sending fraudulent payments:
The report shows how much money customers at the 14 major UK banks lost to APP fraud for every million pounds they sent and how many APP fraud payments there were per million transactions sent:
- The top four firms with the highest sending fraud rate include TSB, Santander, Metro and Monzo.
- For every £1 million TSB customers sent in 2022, £348 of that was lost to APP fraud. For Santander customers that is £322 per £1 million lost to APP fraud, and for both Metro and Monzo customers that is £280 per £1 million lost to APP fraud. In comparison, for every £1 million sent from customers of AIB Group, only £23 was lost to APP fraud.
- For every 1 million transactions made in 2022 by Monzo customers, 141 were reported as APP fraud. For Starling and Metrobank customers, 127 transactions in every million were reported as APP fraud and for Santander, for every 1 million transactions made 117 were reported as APP scams. In contrast, for every 1 million transactions made by Danske Bank customers, only 39 were reported as fraud.
On banks that hold accounts receiving fraudulent payments:
The report shows which banks and payment firms held accounts that received the highest value of APP fraud per million pounds of transactions and the highest number of APP fraud payments per million transactions received:
- The top four directed firms with the highest account receiving fraud rate include Metro Bank, Starling, TSB and Monzo.
- For every £1 million received into Metro Bank accounts in 2022, £696 of it was APP fraud. For TSB, for every £1 million received, £605 of it was APP fraud. Starling was £307 in every £1 million, and for every £1 million received at a Monzo account, £227 was from an APP fraud. In contrast, for every £1 million received by Santander accounts, only £44 was from APP fraud.
- For every 1 million transactions received into Metro Bank in 2022, 180 were APP fraud payments. At Starling it was 119 for every 1 million transactions and TSB, every 93 for 1 million transactions derived from APP fraud. In comparison, 30 in every 1 million payments at Santander and 38 in every 1 million at HSBC were subject to APP fraud.
What the report tells us
This first report shows the performance of payment firms in 2022, prior to any regulatory requirements that will come into effect. The PSR has been pushing forward wide-ranging plans to tackle APP fraud, including a new reimbursement requirement becoming mandatory in 2024. The new measures will also see both sending and receiving firms being held equally liable for reimbursing victims of APP fraud in nearly all cases.
Significantly, there are currently inconsistent outcomes for customers who report an APP scam to their bank or building society. For example, some automatically reimburse in full, others may only make a partial reimbursement leaving victims to bear part of the loss, and others will only accept claims subject to very narrow circumstances.
The voluntary CRM has delivered some good outcomes and was an important first step in getting some of the banks to do more to tackle APP fraud, but it has not led to consistent performance. While most of the firms who are CRM members have higher rates of reimbursement to victims, several other members performed poorly.
Payment firms that we directed will be required to publish this information on their websites within 20 days which will give consumers greater transparency about how they deal with APP scams.
The PSR will continue to collect data from payment firms over the next 12 months and will publish 2023’s report next year. It is also working with the FCA to identify where action is needed and will set out plans for payment firms to make necessary improvements. The PSR is also considering how it can collect data which shows where APP fraud originates. The PSR wants this data to raise awareness about the different ways fraudsters can target victims, such as through social media platforms.
New measures announced by the PSR in June 2023 will see mandatory reimbursement requirements in place for victims of APP scams come into force in 2024. The UK’s payment firms have also seen additional interventions from the PSR to improve data sharing to spot and prevent scams, and the roll-out of the name-checking service, Confirmation of Payee.
- Today’s report covers the period 1 January 2022 to 31 December 2022.
- This report shows the performance of banks prior to any mandatory requirements being in place. That means this first report, and the second will not show the impacts of mandatory reimbursement.
- This reporting requirement was set out in the PSR’s policy and directions in March 2023.
- The 14 of the UK’s largest banking groups are required to provide this data. They include: AIB Group (UK) Plc, Bank of Scotland plc, Barclays Bank UK plc, Clydesdale Bank plc, The Co-operative Bank plc, HSBC UK Bank plc, Lloyds Bank plc, Metro Bank plc, Monzo Bank Limited, National Westminster Bank plc, Nationwide Building Society, Northern Bank Limited, Royal Bank of Scotland plc, Santander UK plc, Starling Bank Limited, TSB Bank plc, Ulster Bank Limited, Virgin Money UK plc.
- The PSR collected data on metrics A and B for the 14 largest banking groups only because these account for the vast majority of Faster Payments transactions (over 95%), account for the majority of reported APP scams, and provide current account services to the vast majority of consumers, small businesses and charities across the UK. Metric C included all payment firms in order to capture all of firms that account for material amounts of APP fraud being received by their account-holders.
- The PSR set out its plans to implement a range of measures to tackle APP fraud in June 2023.