Treasury questions payments regulator on deadline for controversial fraud refund rules
The Treasury has reportedly raised questions with the UK payments regulator over the timetable for its new fraud refund rules that have stirred alarm among banks and fintechs.
The measures, due to force payment firms to refund victims of authorised push payment (APP) fraud up to a limit of £415,000, have prompted concern from both the former Conservative and current Labour governments over fears they could encourage more scams and be unaffordable for smaller businesses.
Treasury officials under new Chancellor Rachel Reeves have spoken to the Payment Systems Regulator (PSR) about its planned 7 October deadline for the rules, the Financial Times reported.
“We’re asking: is this a sensible deadline?” one inside source is reported to have said.
The Treasury declined to comment when approached by City PM A person familiar with the matter said it engages “routinely with the PSR on a range of live policy matters”.
Dozens of companies are lobbying the PSR to scale back its rules, arguing its £415,000 threshold should be lowered considerably and that the measures be delayed to give firms more time to prepare.
Draft plans from Labour leaked before the general election show it calling the PSR’s rules “unfair and unsustainable” and arguing tech companies should be made liable for APP fraud reimbursement, although this is not an official policy position.
After meeting with industry figures earlier in the month, then City minister Bim Afolami said in May that the rules had “significant problems”.
A PSR spokesperson told City PM: “By introducing the new reimbursement measures coming into force on 7 October, our ambition is to incentivise the entire payments ecosystem to make greater strides in tackling fraud and improving outcomes for victims.
“We have extensively consulted on these measures for over two years and continue to engage closely with industry to ensure timely and effective implementation.”
Britons lost roughly £459.7m to APP fraud last year, according to banking trade body UK Finance. However, some experts believe the true figure is likely closer to £700m as around a third of scams are estimated to go unreported.