Financial watchdog slams payment firms for lacklustre handling of APP fraud
The UK’s financial watchdog has found that payment firms should bolster their systems to better detect and prevent authorised push payment fraud (APP), as well as treat victims better.
The Financial Conduct Authority (FCA) noted “an insufficient focus on delivering good consumer outcomes” across the board.
A report from banking trade body UK Finance found last month that fraudsters took £580m from Britons in the first half of 2023 while urging Big Tech to take more responsibility for online scams.
Data released by the Payment Systems Regulator (PSR) last week showed how the UK’s largest banks were affected by fraud last year, with Monzo and Starling among the worst performers.
The FCA’s review on APP fraud, where the victim is tricked into making the payment themselves, is working with payment service providers, including banks, building societies and other businesses that provide payment accounts.
The watchdog found examples of poor complaint handling, including inaccessible reporting systems, slow response times and unclear decision letters that were sometimes accusatory.
It added that firms were not fully considerate of victims’ vulnerability, with management often prioritising commercial risk appetite over customer impact and treatment.
An FCA spokesperson told Morning Wire: “Firms must protect their customers from fraud, and as our review makes clear, some firms need to make improvements to strengthen their anti-fraud controls and improve their support for customers.
“We are working with the firms in our review to address these points.”
The watchdog advised companies to build frameworks to help them comply with new rules from the PSR set to come into force next year that will hold sending and receiving firms equally liable for reimbursing victims in nearly all cases.
UK Finance has criticised the measures, urging for technology firms to be held more accountable as the majority of scams originate online.
A UK Finance spokesperson told Morning Wire: “This is an important review from the FCA, and firms will always work to enhance the way they deal with fraud.
“The financial sector is dedicated to supporting victims and is currently the only sector to reimburse them.
“We are also committed to preventing these awful crimes from happening in the first place. And to do that, we need other sectors to step up and play their part too.”