Plans for mandatory refunding of victims of fraudulent payment scams are among prloposals put out to consultation by the Payment Systems Regulator.

The consultation covers the issue of authorised push payment ("APP") scams, where individuals are tricked into sending money to an account controlled by a fraudster, as well as accidentally misdirected payments that are not recovered. Latest figures show that in the first half of 2021, £355m was lost to APP scams, overtaking credit card losses.

The regulator expects to see more action from financial institutions to stop these scams from happening and to better protect people if they do fall victim. Its proposals include: 

  • Publication of fraud data by banks: Banks and building societies in the 12 largest banking groups in Great Britain and two largest banks in Northern Ireland outside those banking groups must publish data on their performance in relation to APP scams, on reimbursement levels for victims, and which banks and building societies’ accounts are being used to receive the fraudulent funds.
  • Improve scam prevention: Industry will improve intelligence sharing to enhance detection and prevention of APP scams.  
  • Reimbursing victims: Developing how best to make reimbursement mandatory to victims of APP scams, once legislative changes have been made. 

The regulator intends to require the publication of fraud data, and is keen to work with firms to identify the most appropriate ways this will be collected before the requirement comes into effect.   

Coinciding with the consultation launch, HM Treasury announced legislative changes to provide for mandatory reimbursement for scam victims. The consultation sets out further details about how that can be achieved.  

Chris Hemsley, managing director of the Payment Services Regulator commented: The growing problem of APP scams has seen people lose devastating amounts of money. More needs to be done and while voluntary industry measures have helped some victims, there are many institutions which have yet to step up to the mark and protect people properly – including social media firms.  

"The range of steps we plan to take will show people which banks and building societies are likely to respond to frauds in the right way and will put the onus on financial institutions to get better at detecting and preventing scams.  

"We are also setting out the way to make reimbursement mandatory for those blameless victims so that, when the law is changed, we are ready to act as quickly as possible to get protections to the people who need them."

Click here to access the consultation. Responses are due by 14 January 2022. The regulator is keen to hear the views of anyone who has feedback on its proposals.