As it stood, from 7 October banks and payment companies would have to pay up to £415,000 to fraud victims who successfully claimed for a refund.
However, this amount will be lowered to a maximum of £85,000, due to prolonged pressure from fintech firms.
In December 2023, PSR announced the plans to match the upper limit of what the Financial Ombudsman Service (FOS) could offer in redress, which included a claim excess of no more than £100.
The regulator said in August the move would “dramatically increase protection for customers”. It has also been noted the higher rate of reimbursement would incentivise banks and other payment firms to prevent APP scams at source “while ensuring victims are protected in a consistent way”.
But, over nine months since the proposals, thanks to demands from the former Government and payment firms, the expectation for firms to cover will be £300,000+ less than originally intended.
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The reason for the new plan, which the PSR notes will still help redress 99% of victims’ cases, is due to the number of claims for losses over £415,000 being only 18, compared to 411 for those over £85,000.
Also, the regulator claimed whenever there is a huge loss of £415,000 or more, there is commonly a series of smaller payments which accumulate to the total figure.
The Payments Association was one dissenting voice to the former higher cap and requested the legislation to be delayed by a year so the industry can have all the correct policies and technology in place to combat scammers.
It even called for the maximum reimbursement for fraud victims in the UK – who lost a total of £1.2bn in 2023 – to go even lower to £30,000.
Meanwhile, the climb down customers can claim coincides with the record levels of fraud and scam complaints made to the FOS.
In Q1 2024, over half of the 6,094 fraud and scam complaints were about authorised pushed payments.
David Geale, the PSR’s managing director, said: “We listened to concerns about the reimbursement limit and committed to collecting more evidence to inform our approach. As a result, we are now consulting on a limit that still covers the vast majority of authorised push payment scams and strikes the right balance.
“Under our proposals, consumers in the UK will still receive world-leading protection, payment providers will still be heavily incentivised to improve anti-fraud protections and we maintain effective market competition and innovation.”
‘Outrageous’
Rocio Concha, Which? director of policy and advocacy, said: “It’s outrageous that the payments regulator is set to water down vital scam protections weeks before they were due to take effect and that this move follows months of lobbying from firms that refuse to take fraud seriously.”
Concha added: “Slashing the reimbursement limit risks exposing victims of the highest value scams to devastating financial and emotional harm and also significantly reduces crucial financial incentives for payment firms to put in place effective fraud security measures.
“This makes it more likely that scammers will continue to thrive on some payment platforms.”
