PSR publishes final APP fraud reimbursement details

PSR has made all its policy decisions and published details of the full APP fraud reimbursement regime which will take effect on 7 October 2024.

It has confirmed:

  • the upper claim limit will be £415,000 to match the FOS limit (although the PSR will keep a close eye on the amount and impact of high value scams in the lead up to implementation);
  • that “sending” firms can apply a claims excess, but not for more than £100 – but they cannot apply any excess at all to claims from vulnerable customers;
  • what the consumer standard of caution will be – with the onus being on the PSP to prove the consumer acted with gross negligence.  PSPs will not need to pay out where the consumer has acted either fraudulently or with gross negligence. The high bar will be based on 4 requirements, and it will not be enough merely to say the consumer failed to meet one of them – it must have been grossly negligent in failing to do so. Again, no vulnerable customer may be assessed as failing to meet the standard of caution. It has published both the consumer standard of caution exception document, and guidance on it. Its approach is based on:
    • the requirement for consumers to have regard to interventions from their sending PSPs or the police – and those interventions must clearly communicate the assessment of the probability that the payment is a scam. This must be bespoke and not a boilerplate, non-specific warning;
    • the requirement to report promptly to the relevant PSP if a consumer suspects they have been scammed – and in any event to report within 13 months;
    • the requirement to respond to any reasonable and proportionate requests for information from PSPs to help assess a claim.  This includes requests under PSR’s “stop the clock” rules;
    • the consumer agreeing that the PSP may report the matter to the police, or acting on a PSP request that the consumer report the details to a relevant authority.

PSR has published the legal instruments which will require Pay.UK and all payment firms that use FPS to implement its requirements. Two requirements apply to Pay.UK – to create the reimbursement rules and to create and propose to PSR a plan for effective compliance monitoring. The third is a requirement on all directed PSPs to comply with the reimbursement rules.

Emma Radmore