UK payment firms urge regulator to delay controversial fraud refund rules
Firms have urged the UK payments regulator to delay fraud reimbursement rules following growing criticism of the measures and the recent departure of the watchdog’s head.
In a letter on Monday, the Payments Association called on the Payment Systems Regulator (PSR) to delay measures due to force banks and other payment firms to reimburse victims of authorised push payment (APP) fraud up to a limit of £415,000 per claim from October.
The trade body, which has more than 200 members, said delaying the plan by a year would allow the sector to “ensure the right policies, technology and systems are in place to avoid permanent damage to the UK’s payment industry”.
It added that the delay would also give regulators and the government extra time to involve technology and social media companies in the plans. The group is also lobbying to lower the refund threshold to £30,000.
The Payments Association wrote to David Geale, who took over as interim managing director of the PSR following the departure of former head Chris Hemsley two weeks ago amid growing criticism from both the industry and within the Treasury.
Industry figures have said the costly measures could threaten smaller firms’ business models and encourage criminals to pretend to be victims for reimbursement money. City minister Bim Afolami said last month that the proposals had “significant problems”.
Riccardo Tordera-Ricchi, the Payments Association’s head of policy and government relations, said “the prudential risk and requirements to participate in the UK payments market will increase significantly” if the rules go ahead as planned.
He added: “It will also result in an increase in cost and friction of real-time payments and a decrease in investment into the UK fintech market due to higher risks of failure and lower profitability.”
Banking trade body UK Finance has criticised the PSR’s rules for placing all liability on payment firms, whereas roughly 80 per cent of APP fraud originates online. However, it is not asking for an extension to the October deadline.
Geale said on Monday: “APP fraud continues to be a problem, and last year victims lost around £450m. We therefore need to act quickly.
“After more than two years of extensive consultation and industry engagement, our requirements will come into effect on 7 October.
“We will continue to engage with and support industry, taking into account all feedback as we move forward and as industry works hard to implement the systems and processes needed for the new reimbursement requirements.”