The British payments regulator has reportedly significantly reduced its fraud reimbursement plan.
Banks and payments companies in England should have reimbursed scam victims up to £415,000 ($544,000), but will now have to pay a maximum of £85,000 ($111,000), according to the Financial Times. reported Wednesday September 4, citing sources close to the matter.
The move follows pressure from the banking/payments industry on the Payment systems regulator (PSR) to reduce the repayment plan, which is expected to take effect on October 7. According to the FT, a consultation on the new limit should be announced on Wednesday.
The report also notes that the PSR announces that it will publish findings on the scale of recent payment fraud on individual transactions of more than £85,000. However, the regulator refused to say whether it would reduce the proposed threshold for mandatory repayment by banks of £415,000.
A PSR spokesperson told PYMNTS that the regulator will answer questions after releasing its findings Wednesday morning.
The PSR had called for this reimbursement plan following a surge in Authorized Push Payment (APP) fraud, which refers to cases where a person is duped into sending money from their bank account to a fraudster posing as a legitimate beneficiary.
Such fraud costs UK residents dearly $433 million last yearaccording to a report published by the PSR in August. This is a 12% decrease from the previous year, even though the volume of fraud cases increased by the same amount.
Industry groups such as the Payments Association have pressured the PSR to wait at least a year before imposing the new measure.
Riccardo Tordera-Ricchi, the association’s head of policy and government relations, said in June that if planned APP fraud reimbursement changes go as planned, “the risk and prudential requirements participation in the UK payments market will increase significantly.
“This will also lead to increased costs and friction of real-time payments as well as decreased investment in the UK FinTech market due to higher risks of failure and lower profitability,” added Tordera- Ricchi.
However, the PSR is committed to move forward with your plan no later than August 21.
“We have consulted extensively on these measures for more than two years and continue to work closely with industry to ensure rapid and effective implementation,” Kate Fitzgerald, head of policy at PSR, told Bloomberg News at the era.
Dan McLoughlin, fraud and security specialist at Lynx, told PYMNTS he was disappointed by the decision.
“Such a dramatic drop in the refund amount removes much of the financial incentive for banks to prevent fraud,” he said. “Although most cases of APP fraud will remain covered by the Regulation, this decline shows the reluctance of banks to accept responsibility and make difficult decisions. This robs them of their willingness to invest in robust fraud detection and prevention systems, which ultimately protect consumers.
