(qlmbusinessnews.com Thurs. 26th Sept, 2024) London, UK —
“Fraud Victims in UK to Receive Up to £85,000 Refund Within 5 Days Under New Regulations”
From 7th October, UK banks will be required to refund fraud victims up to £85,000 within five days, following new regulations introduced by the Payment Systems Regulator (PSR). While many banks and payment providers already offer voluntary compensation, this move marks the first time such refunds have become mandatory worldwide.
The £85,000 cap was reduced from a previous proposal of £415,000, after concerns were raised by the financial industry. The PSR stated that this amount would cover over 99% of fraud claims. Once a customer is refunded, the bank or payment provider will be able to reclaim half of the compensation from the bank where the fraudster's account is held, a change designed to encourage quicker action against fraudulent accounts.
Consumer group Which? expressed concerns over the lowered cap, warning of potential “disastrous consequences” and urging the regulator to closely monitor its impact.
The type of fraud covered under these new rules is known as authorised push payment (APP) fraud, where criminals trick victims into transferring money by posing as legitimate businesses, such as banks or service providers. APP fraud cases rose by 12% in 2023, with total losses reaching £459.7 million.
While these new rules provide mandatory protection for APP fraud victims, some in the financial sector worry about the impact on smaller firms, as significant payouts could create financial strain.
David Geale, managing director of the PSR, said the new system ensures fairness, providing the same level of help to all victims regardless of their bank. He described the ability to reclaim half the refund from the fraudster’s bank as a “game-changer”, incentivising the closure of fraudulent accounts more swiftly.
However, Rocio Concha of Which? criticised the reduction in compensation, arguing it might reduce banks’ motivation to prevent fraud and could have severe financial and psychological impacts on victims.
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