• PSR’s proposals will protect consumers against APP scam losses and reduce fraud 

  • Reimbursement of victims would – above a minimum threshold – be mandatory and result in more money being returned sooner 

  • Places strong incentives on banks and building societies to do more to prevent fraud  

Today, the PSR published its latest consultation that will usher in greater protections from Authorised Push Payment (APP) scam losses and will see further action being taken to prevent scams from happening in the first place.  

APP scams continue to be a problem and have a devastating impact on the people who fall victim. APP scams are now the largest type of payment fraud in the UK. The PSR’s ongoing work identified concerns about outcomes for victims under the current voluntary approach taken by banks and building societies.  

Last November, the PSR consulted on a package of measures to combat APP scams, including mandating reimbursement for victims. The regulator is now consulting on specific proposals that would put that mandatory reimbursement in place for all online and mobile payments. In line with protections for other payments and financial services, reimbursement would be on all payments over £100 and subject to an excess of no more than £35.[1] This consultation will ensure the PSR can make the necessary regulatory changes as soon as the law has been changed which will allow the PSR to act on APP scams.[2] 

What this consultation is considering: 

The PSR wants the payments industry to change the way it manages APP scams. The measures being proposed include: 

  • Requiring reimbursement in all but exceptional cases – so more victims will get their money back.  
  • Improve the level of protection for APP scam victims – so there is greater consistency in protections for all victims, irrespective of who they bank with.  
  • Incentivise banks and building societies to prevent APP scams – because responsibility for allowing fraudulent payments is the responsibility of both the sending and receiving banks or building societies.  

The PSR wants to see the requirements for mandatory reimbursement in place for consumers as soon as possible. Consumers still need to take caution when sending payments, but these proposed measures will have the added protection that most of their larger payments will be automatically protected. Shifts in the way industry carries out fraud prevention will also mean consumers see their account providers stepping in more regularly to prevent fraud, as is seen with card payments.  

The regulator is working with Pay.UK - the operator of the Faster Payments system - and the industry to make sure its requirements can be implemented quickly after legislation is passed. In the meantime, banks and building societies should continue to develop their fraud detection and prevention arrangements to respond to the ongoing risk of fraud to their customers.  

Chris Hemsley, Managing Director at the PSR said: 

“Fraudsters have continued to devastate the lives of innocent victims through APP scams. We want to see all banks, building societies and other payment providers doing more to prevent APP scams from occurring in the first place. These proposals will mean everyone has more protection from scams.  

“We’ve seen progress over the last few years. Some firms have even gone much further with fraud guarantees, so we know people can be protected effectively. Our proposed rules will see everyone benefitting from strong protections, regardless of who they bank with.” 

An update on other measures the PSR is looking at: 

In addition to preparing to act as soon as it is given the necessary powers, the PSR is also leading on a wider set of changes that would: 

  • Lead to the publication of data on how well firms are protecting customers from summer 2023. 
  • Continue to the widespread rollout of Confirmation of Payee – the name checking service designed to help prevent APP scams and misdirected payments. This would see coverage of this service from around 90% of transactions to almost all payments made by FPS and CHAPS. 
  • Support and encourage improved intelligence sharing to spot fraudulent transactions and stop them from happening.  

The PSR’s latest consultation closes on 25 November 2022.  



Notes to editors: 

  1. The PSR proposes to allow Payment Service Providers (PSPs include banks and building societies) to have a minimum threshold for a reimbursement claim (of no more than £100); withhold an ‘excess’ (of no more than £35); and set a time limit for claims (of no less than 13 months). These options may help PSPs ensure their customers take care in making small payments, minimise claims for civil disputes and maintain proportionate costs, while protecting consumers appropriately. 
  2. In May 2022, Treasury announced its intention to legislate to allow the PSR to require victim reimbursement for APP scams. The legislative changes are part of the Financial Services and Markets Bill and will include a duty that will require the PSR to implement measures within six months of the new laws coming into effect. 
  3. Fraud is the largest contributor to crime in the UK, and APP scams are rising quickly. They are now the largest type of payment fraud, both in the number of scams and the value of losses. In 2021, losses to APP scams totalled £583.2 million, a 39% increase on the previous year. Many cases go unreported, so the real figures are likely to be higher. Of these reported cases, currently only 46% of total APP scam losses are reimbursed to the victim. 
  4. Reimbursement for APP scams is currently applied by signatory firms under the Contingent Reimbursement Model Code (CRM), which is overseen by the Lending Standards Board. 
  5. Ten banks and building societies have signed up to the CRM Code. This is a voluntary industry code. Following the Code’s introduction, the rate of victim reimbursement by value rose from an industry average of 19% in the first half of 2019 to 41% by Code signatories in 2020, but only half of all victims receive their money back.  
  6. TSB has offered a fraud refund guarantee since 2019: the bank fully reimburses all APP scam losses unless the customer has been grossly negligent. Refunds are capped at £1 million. 
  7. Since 2021, Nationwide has provided a Scam Checker Service (SCS): members can talk to Nationwide when they're not sure about a payment they're about to make. If the SCS reviews a transaction that turns out to be a scam, Nationwide fully reimburses the customer unless the SCS recommended that they do not make the payment. 

Consultation on proposals around mandatory reimbursement