The Payment Systems Regulator (PSR) has introduced a new reimbursement requirement which will see the majority of money lost to authorised push payment (APP) fraud reimbursed to victims.

Following consultations over the last few months, the PSR said the move will prompt a “step-change in fraud prevention”.

The regulator’s policy statement has confirmed that the maximum level of reimbursement per claim will be set at £415,000, and that this applies to all consumers. This is in line with the maximum award the Financial Ombudsman Service can make when considering complaints.

As a result, the PSR will monitor the incidence and impact of high value APP scams over the next 10 months, before the reimbursement requirement start date of 7 October 2024.

The regulator said it wants to see people be protected from APP scams “as quickly as possible”, but added that it recognises the need to ensure the critical systems needed to support the requirement must be in place.

Managing director at the PSR, Chris Hemsley, said: “The action we’re taking significantly increases the level of protection for people and puts the UK at the forefront of APP fraud protections globally. Our approach incentivises banks and other payment firms to prevent APP fraud from happening in the first place while ensuring victims are protected in a consistent way.

“Payment firms are already getting ready by improving fraud controls and more people are getting their money back. We now expect the momentum to implement the full protections to increase.”

The PSR has also published the three legal instruments which require Pay.UK and all payment firms that use the Faster Payments Scheme (FPS) to implement the requirements of the reimbursement policy.

Alongside the new requirement to reimburse victims, the PSR is significantly increasing the incentives on all payment firms to do more to detect and prevent APP fraud from happening in the first place. This includes splitting the cost of reimbursement 50:50 between sending and receiving firms – putting incentives in at the receiving end for the first time.

“We’ll be working closely with Pay.UK and payment firms to make sure they’re fully prepared to implement the new requirement next year,” Hemsley added.

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