FCA introduces new rules to protect victims of fraud

The Financial Conduct Authority (FCA) has recently published new rules which allow victims of authorised push payment (APP) fraud to complain to the payment services provider (PSP) receiving their payment.

In the occurrence of APP fraud, the PSP is usually a bank which holds the accounts of either the victim or fraudster. Currently, the sending PSP, but not the receiving PSP, must handle these complaints in line with existing complaints handling rules in the FCA handbook.

However, these obligations have now been extended to the receiving PSP and victims can refer their complaints to the Financial Ombudsman Service if they are not satisfied with the outcome. The regulator has announced that the new rules will be enforced from 31 January 2019.

Commenting on the amendment, FCA executive director of strategy and competition Christopher Woolard: “The FCA takes APP fraud and the harm it causes to consumers very seriously. Now victims of APP fraud can make a complaint to the PSP receiving their payment and if they’re not satisfied with the outcome, can refer their complaint to the Financial Ombudsman Service.”

APP fraud occurs when a fraudster deceives a payer into making an APP to an account controlled by the fraudster, with data published by UK Finance revealing that there were 43,875 cases of APP fraud and total losses of £236m in 2017.

Following a complaint from Which?, the FCA and Payment Systems Regulator (PSR) investigated APP fraud and found that receiving PSPs could do more to identify fraudulent incoming payments and prevent accounts from being compromised by fraudsters. The regulator expressed that it shares concerns with the PSR regarding the growth in the number of APP fraud attempts, acknowledging that it is becoming a growing problem.

Separately, a steering group established by the PSR is developing a voluntary industry code, which aims to set standards for PSPs to prevent and respond to APP fraud and reimburse victims of APP fraud in certain circumstances.

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