BoE updates on CHAPS APP plans

The Deputy Governor of BoE has written to the Treasury sub-committee on Financial Regulation to update on progress on protection from APP fraud within the CHAPS system. The letter confirms the BoE’s intention to implement measures similar to those now confirmed by the PSR in respect of Faster Payments. CHAPS direct participants will be required to implement mandatory reimbursement via a PSR direction to comply with rules in the CHAPS rulebook when settling consumer payments. Around 10% of CHAPS volumes relate to housing purchases which are the key consumer payments made through CHAPS. Affected sending PSPs will be required to reimburse the victim within a stipulated time frame and will then look to recover an appropriate proportion from the receiving PSP. PSPs will report on reimbursement outcomes and the PSR will consider whether to take action for unsatisfactory performance.

Some aspects of the arrangement may be different from the Faster Payments model, notably the maximum reimbursement level, given that CHAPS has no maximum payment size but BoE will nevertheless look to put in place a maximum APP reimbursement limit in line with what PSR decides.