The All Party Parliamentary Group (APPG) on Fair Banking has published a report on APP fraud, considering its scale and impact, and the effectiveness of associated regulation.
The report concludes that while significant steps have been taken to tackle APP fraud, the problem is not yet under control. Annual losses to APP fraud are much larger than estimated and although some metrics are falling, others are rising.
The report looks at some case studies of tactics scammers use and trends in fraud, and what banks and other PSPs are currently doing. It looks at the reasons for the decision to set the reimbursement limit at £85,000 and says it will be critical fully to gather data on how many claims fall above this amount but under the originally proposed £415,000 limit when reviewing whether the reduction was appropriate, and the figure is an appropriate balance of risk between PSPs and consumers.
The APPG is still in the early stages of understanding how the APP compensation scheme and improved fraud prevention measures are working, and will have further recommendations later in 2025 as a result of follow up work. However, one of its immediate concerns is that PSPs are not processing claims quickly enough (or even within the 5 day deadline). It is also concerned at the number of complaints the FOS is currently having to deal with about compensation claims.
The APPG will have further recommendations later this year, but, for the moment, it makes the following recommendations:
- All PSPs should be required to establish a clear pathway for reporting fraud. If they don’t it may be necessary to look at creating a centralised system where frauds can be reported, data collected and performance monitored;
- Greater disclosure of APP fraud numbers and types, including:
- Average number of payments per case, broken down into specific fraud types; and
- Numbers of complaints relating to non-payment of compensation for APP fraud losses that end up with FOS;
- Compliance with five-day target for compensation under the PSR Mandatory Reimbursement Requirement (MMR);
- Social media companies to be required to contribute towards the MRR and the Economic Crime Levy, with the Government legislating, or acting on existing legislation, so that social media companies are held accountable for their success, or failure, in tackling fraud; and
- PSR to monitor how fraud warnings are being used, their frequency and content to ensure they are effective in deterring fraud and not being used as a reason to turn down compensation requests.