Laura WilesUK Finance and the LSB have responded to the PSR’s urgent consultation on lowering the maximum level of reimbursement for Faster Payments APP scams to £85,000, a significant reduction from the previously agreed £415,000 (which had been the FOS maximum at the time it was set) to the FSCS maximum.
UK Finance’s response, while acknowledging the risks of a high maximum reimbursement level, remains focussed on the creation of a more effective Consumer Standard of Caution model. It notes that the PSR’s current standard focuses largely on actions consumers must take to secure reimbursement, rather than providing basic steps for consumers to protect themselves from fraud risk.
It states that if the PSR pursue the proposed approach, it is the preference of UK Finance that the level is regularly monitored and reviewed against industry fraud levels and average case values. Conversely, it does not support the proposal that the level shall be adjusted in line with any future changes to the FSCS, which exists to compensation consumers for different types of losses to those incurred as a result of APP scams.
UK Finance also warns that the timing – with the consultation outcome due at the end of September – and magnitude of the changes required may not be achievable before the implementation date of 7 October. It has asked that the PSR make clear in written regulatory forbearance that it does not expect firms to meet the 7 October deadline for consumer communications, and instead will expect consumers to be informed as soon as reasonably practicable.
The LSB expressed its disappointment that the PSR proposes to reduce the scope of consumer protections under the mandatory reimbursement scheme so close to its implementation date. It has significant concerns about the potential impacts on some victims of APP fraud, and notes that this reduction will now only cover 90% of cases, rather than the previously promised 98%, such that the remaining 8% would account of £30m of customer losses.