APP Scams Reimbursement Requirement Takes Effect With an £85,000 Cap

Authorised push payment (APP) scams occur when a person is manipulated into authorising a payment to an account controlled by a criminal, for example through impersonation, investment or purchase scams.

How the regime works

The framework was set out in the PSR's December 2023 policy statement PS23/4. Pay.UK, as operator of Faster Payments, must create reimbursement rules under a specific requirement, while directed payment service providers must comply with the reimbursement requirement under Specific Direction 20. Pay.UK must also operate a compliance monitoring regime. The PSR's policy covers the consumer standard of caution exception, the level of the excess and the maximum level of reimbursement, and the relevant instruments were amended in July 2024.

The £85,000 cap

The PSR said that setting the maximum at £85,000 means that 99.8% of Faster Payments APP scams by volume, and 90% by value, will be fully reimbursed where they are in scope. The Bank of England, as operator of CHAPS, has set the same £85,000 maximum for APP scams made through CHAPS. The PSR will keep the level under review as part of a 12-month evaluation of the policy.

What it means for payment firms

The APP scams reimbursement requirement changes the economics of fraud prevention for banks, building societies, electronic money institutions and payment institutions that send or receive Faster Payments. Firms need claims handling processes, data reporting to Pay.UK and controls that can demonstrate when the consumer standard of caution exception applies. Customer communications, scam warnings and payment friction for higher-risk transactions are likely to receive closer attention, and the 12-month evaluation will show whether the PSR considers the cap appropriate.

Sources

• Payment Systems Regulator: PS24/7 Confirming the maximum level of reimbursement
• Payment Systems Regulator: PS23/4 APP scams reimbursement policy statement