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The UK's Lending Standards Board (LSB) has published updates that enable more firms to sign up to the Contingent Reimbursement Model (CRM) Code — the set of voluntary standards that aim to protect people against authorised push payment (APP) fraud.
The LSB, the UK’s voluntary group for fair lending, has published a series of updates to the CRM Code, which it says will further strengthen what is the only set of protections of its kind for tackling APP fraud.
Launched in 2019 and overseen by the LSB, the CRM Code requires signatory firms to detect, prevent and respond to APP scams.
Financial institutions that are signed up to the code must also make a commitment to reimburse customers who lose money in cases where they were not to blame for the success of a scam.
“Today’s updates will up firms’ scam prevention efforts, ensure a wider spread of customers are protected from scams and will help build transparency and understanding between firms and their customers,” said Emma Lovell, chief executive of the LSB.
There was an inevitability for change in this niche area of the industry, according to Ed Adshead-Grant, general manager at Bottomline Technologies. "The ambiguity in liability for APP frauds, alongside the lack of a mandate to use the CoP service has not helped the recent history of APP scams, which are at record levels of activity and expected to be close to £1bn in losses in 2021."
Many victims have been turning to the Financial Ombudsman to raise their case and are being successful for the most part, he added. "The tidy up of the CRM Code is welcomed, as is the imminent mandating of many more payment service providers to implement CoP for consumer and businesses”
Updates to the code, according to the LSB, will help improve customers’ understanding of how firms are assessing APP scam cases. It will also require code signees to give consumers a clear explanation to help them understand reimbursement decisions made.
In addition, Confirmation of Payee (CoP) requirements have been made mandatory for all signatory firms.
CoP is a way of checking that a recipient’s name and account number match, and firms that implement this can warn customers when there is not a match.
This enables greater confidence among customers that they are sending money to the right place while helping avoid payments being misdirected, either accidentally or as part of an APP scam.
Recognising the impact that wider participation in the CRM Code will have on customer protection, the LSB has also adjusted provisions within it to allow more firms to sign up.
“Stopping scams from occurring in the first place is of utmost importance, an aim that should be shared by all,” said Lovell. “Ultimately, prevention of scams removes the stress and shame that comes with being scammed in the first place, and from a wider societal point of view, it stops such scams from being used to fund serious and organised crime.”
Lovell also took the opportunity to point out that preventing scams from being successful is not just the responsibility of financial services firms.
“By point-of-payment it is often too late, with victims socially engineered to proceed with the scam no matter what,” she said. “We are therefore also calling on social media platforms, telecommunications companies, and utilities to step up and increase their efforts to intervene at every opportunity.”
