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The Payment Systems Regulator (PSR) has ordered more than a dozen of the UK’s largest payment services providers (PSP) to regularly submit data on how well they are handling authorised push payment (APP) scams.
On March 23, the PSR directed 14 of the largest UK PSP groups to collect and provide data on the rates of APP scams in both their sending and receiving capacity, as well as on how often they reimburse consumers.
The direction applies to AIB, Barclays, Danske Bank, HSBC, Lloyds, Metro Bank, Monzo, NatWest, Nationwide, Santander, Starling Bank, the Co-operative Bank, TSB and Virgin Money.
These firms together cover 95 percent of transactions, according to the PSR.
The agency will then publish data in an aggregated form, which will enable consumers to see how well banks protect them against APP fraud and choose with whom they want to bank.
According to the PSR, this “financial and reputational incentive measure” will bring greater transparency in the fight against fraud.
Kate Fitzgerald, head of policy at the PSR, said this is “a major step” forward in tackling APP scams that will provide “a new and unprecedented level of transparency to consumers on which payment firms have the highest levels of scams and how well each firm is looking after victims”.
“Firms across the fraud journey — from where the transaction is initiated to where it is being received by the fraudster — will also be incentivised to raise their game and do more to detect and prevent APP scams in the first place,” Fitzgerald stressed.
The first aggregated data will be published on the PSR’s website in October, based on information submitted by these firms until May, and will be updated every six months afterwards.
Commenting on the announcement, TSB told VIXIO that it introduced a fraud refund guarantee in April 2019 and has published their refund rate since 2020, which is 97 percent.
“After almost four years we’re pleased that the rest of the industry will now be required to do the same,” the bank’s spokesperson said.
“This is a huge victory for consumers who will now be able to look at refund rates when deciding who to bank with.”
Metro Bank said it welcomes any action that improves the fight against scams and “which will help reassure our customers that we are working hard to protect them against scammers”.
Danske and Virgin Money declined to comment, while the others did not reply to a request for comment by the time of publication.
Consumer association Which? also greeted the announcement.
“It’s good to see the regulator moving forward with plans to name and shame the worst performers, which should ultimately lead to more victims getting their money back,” Rocio Concha, Which? director of policy and advocacy, said.
The announcement follows a two-week-long consultation in February on the proposed measures and a wider push from legislators who are unconvinced that the agency’s fraud strategy can sufficiently address the issue.
APP fraud spiked in 2021, when 196,000 UK consumers fell victim and lost £583m to it. It marked the first and so far only time when APP fraud overtook card fraud.
In the first half of 2022, APP fraud losses fell by 17 percent to £249.1m, compared with the first half of 2021. It affected 95,219 consumers, which is 6 percent less than in the same period in 2021. At that point, card fraud took back its position as the most frequent fraud type with £272.3m in total losses.
The PSR emphasised that it will require banks to reimburse customers once parliament has granted it the powers through the Financial Services and Markets Bill, which is still making its way through parliament.
Until then, the agency is using these reputational incentives, which also include industry efforts to improve intelligence sharing and greater consumer protections for APP scam victims.
Additionally, in August 2019, the PSR directed members of the UK’s six largest banking groups to implement confirmation of payee, which now covers 99 percent of all payments made from one bank account to another.
