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The Payment Systems Regulator (PSR) has confirmed that its controversial authorised push payment (APP) fraud reimbursement rules are to go ahead, despite managing director Chris Hemsley’s imminent exit.
A spokesperson for the PSR told Vixio that Hemsley’s departure from the regulator does not change the timelines for the new compliance requirements “at all”.
“They are the PSR’s commitments, agreed by the PSR Board, and will proceed as planned, with continued close working with the industry to support their implementation,” the spokesperson said.
APP fraud rules will come into force in October. Despite high levels of fraud making headlines and becoming a key policy issue for UK parliamentarians, this has not stopped the rules from being a bitter pill for the payments industry to swallow.
It has been one of the biggest backlashes the PSR has faced so far to its policy agenda, having previously remained largely out of the spotlight in comparison to fellow regulators, such as the Financial Conduct Authority (FCA).
City minister Bim Afolami has also intervened, telling the Financial Times last month that he thought the rules had “significant problems”.
Starting October 7, 2024, the new rules require reimbursement within five working days. Costs will be split 50/50 between sending and receiving PSPs, with a maximum reimbursement of £415,000 and an optional £100 excess.
Both faster payments and retail CHAPS payments are included in the regulatory scope, with special provisions for vulnerable consumers.
The rules have caused dismay in the UK and beyond. A Brussels lobbyist for the fintech sector told Vixio, “what the UK is doing is absolutely insane.”
Meanwhile, at an industry engagement event earlier this month, Hemsley and his colleagues were faced with pushback from stakeholders, including the Payment Association’s director Tony Craddock, who warned that the changes are likely to have an impact on the “commercial viability of a whole host of companies in the payments industry providing accounts”.
“I’ve heard estimates of 20 to 40 percent of companies currently doing that could either fail in the next 18 months or leave the UK,” he said.
He warned that this could reduce the competitiveness of the more established and larger players, and is likely to affect the quality of investment and impact on innovation.
Hemsley out by end of the week
The PSR has confirmed that Chris Hemsley will be stepping down from his role as managing director, effective June 7.
“I’d like to thank Chris for leading the PSR over the last five years,” said Aidene Walsh, PSR chair. “UK payments [has] seen significant changes during this period and throughout, Chris has led the PSR into driving effective change to make payments better for everyone.
“He has also transformed the organisation, increasing its impact, and leaves it in a strong position.”
Hemsley is set to join Fingleton, a strategic regulatory advisory firm, as a director later this year, where he will work alongside former PSR colleague Natalie Timan.
Meanwhile, the PSR’s board has confirmed that David Geale has been appointed interim managing director of the regulator, with effect from June 10.
Joining for a period of nine months, Geale hails from the Financial Conduct Authority (FCA), where he has most recently been director of retail banking with responsibility for supervision and policy.
He has also been a non-executive director on the PSR Board since February 2020.
After the general election, the PSR will begin the recruitment process for a new managing director.
“I am delighted that David has agreed to assume the interim managing director role for the PSR at an important time of delivery,” said Walsh. “His time on the PSR Board along with his leadership and wealth of experience in both payments and retail banking in the FCA leaves him very well placed to lead the PSR in its work across the payments ecosystem."
Walsh stressed that the PSR will continue to deliver “the important outcomes outlined in our annual plan, our mid-year strategy review and importantly on our horizon scanning at a time of great change in payments both domestically and internationally.”
