MPs demand action on fraud reimbursement as they criticise ‘half-baked’ plans
MPs have slammed proposals to reimburse fraud victims, describing the plans as “half-baked” without further action from the regulator.
Under the plans being considered by the Payment Systems Regulator (PSR), banks and building societies will have to fully reimburse victims of authorised push payment fraud where the loss is over £100.
Last month MPs questioned why fraud under £100 would not be refunded too.
In a response published today, the PSR said it was aligning the figure with the minimum reimbursement level for credit card fraud, although it admitted this figure was last updated in 1983.
The PSR also noted that 24 per cent of all authorised push payment scams were for transactions less than £100.
Authorised push payment fraud is when a scammer tricks someone into sending them a payment. At least 196,000 consumers lost £583m to these scams in 2021 according to UK Finance.
The Committee raised concerns there are likely to be delays to scam victims getting their money back as the PSR does not have clear guidance confirming what ‘gross negligence’ is.
Under the plans, consumers who show ‘gross negligence’ will not be reimbursed in most cases. The Committee asked for confirmation on what actions would count.
The regulator said the meaning will be clarified as complaints begin to be arbitrated by the Financial Ombudsman Service.
Commenting on the correspondence, chair of the Committee Harriet Baldwin said “fraud is on the rise and our constituents are being robbed.”
“Regulators need to get their skates on and sort out all of these exclusions and criteria quickly. Our Committee will keep up the pressure so that implementation is not dragged out or half-baked.”
Last month the Committee criticised the PSR’s fraud reimbursement scheme which would force Pay.UK – Britain’s interbank payments standards body – to amend its rules to ensure fraud victims are reimbursed by banks.
“Putting an industry body in charge of reimbursing scam victims is like asking a fox to guard the henhouse,” Baldwin said.