UK regulator mulling cut to fraud refund cap after industry pressure

4th Sep 2024 13:02

(Sharecast News) - The UK's payments regulator has proposed slashing the maximum amount banks and fintechs would have to reimburse fraud victims after industry pressure to review the cap.

Under current rules laid down by the Payment Systems Regulator (PSR) banks and fintechs have to reimburse victims of authorised push payment (APP) fraud up to a limit of £415,000 per claim from October 7.

However it is now consulting on lowering the cap to £85,000 after intense lobbying from trade bodies UK Finance and Innovate Finance. The consultation is scheduled to close on September 18.

The £85,000 threshold is in line with the deposit protection limit offered by Financial Services Compensation Scheme if a UK bank fails.

When the PSR published its requirements for payment firms to reimburse APP scams victims in December 2023, it committed to consider high value fraud claims and publish the findings. The PSR's review found that - out of more than 250,000 cases - there were 18 instances in 2023 of people being scammed for more than £415,000, and 411 instances of more than £85,000.

The analysis also highlighted that almost all high value scams are made up of multiple smaller transactions, reducing the effectiveness of transaction limits as a tool to manage exposure.

Reporting by Frank Prenesti for Sharecast.com