PSR Highlights UK Compliance Priorities As APP Fraud Rules Approach

May 30, 2024
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Payments companies in the UK must put in place fraud-reporting measures and inform customers of their reimbursement rights under new regulations coming into force in October this year, the Payment Systems Regulator (PSR) has said.

Payments companies in the UK must put in place fraud-reporting measures and inform customers of their reimbursement rights under new regulations coming into force in October this year, the Payment Systems Regulator (PSR) has said.

“This is a significant change in industry rules that requires all payment firms with customers making use of FPS and/or CHAPS to take action,” the PSR wrote in a letter to participants of the Faster Payments System (FPS) on May 24, describing the new compliance requirements as “a step change in fraud prevention”.

FPS participants include leading banks such as NatWest and Barclays, as well as payments and e-money institutions like SumUp, Square and Wise. 

Companies will need to determine the applicability of the new requirements to their operations, whether as sending PSPs or as receiving PSPs providing accounts to service users, the PSR said. This encompasses both direct and indirect participants of the system, and each firm will need to assess its role and responsibilities under the new rules to ensure compliance.

The PSR has also indicated that Pay.UK, which runs the UK’s retail payments operations including FPS, has procured a reimbursement claim management system (RCMS). 

This central system will enable firms to communicate with each other and to manage authorised push payment (APP) scam claims, the PSR said. It will further allow firms to report data to Pay.UK so it can monitor and manage firms’ compliance with its FPS reimbursement rules. 

“Pay.UK has been supported by industry to ensure that there is capacity and capability within existing claim management systems to play a part in supporting firm readiness on 7 October and transition to the RCMS,” the PSR wrote. “We would like to take this opportunity to recognise the efforts of all parties to ensure there are sufficient systems and processes in place from day 1 to support effective implementation of the reimbursement requirement.”

Firms will need to register with Pay.UK “as soon as possible”, with the PSR reminding them that the deadline is August 20, 2024, to facilitate Pay.UK creating a directory of firms’ contact details and putting in place the onboarding arrangements for the firm to meet its obligations from the policy start date. 

Additionally, the PSR has encouraged firms to attend Pay.UK’s engagement sessions.

The PSR has also called for firms to be proactive in informing consumers about the new reimbursement requirements, stating that transparent communication is essential to ensure that customers are aware of the available protections under the new rules. 

Firms will further need to consider how consumers will be able to report fraud and to make the process as simple and accessible as possible, taking into account the needs of vulnerable consumers, according to the PSR. 

Despite these areas of concern, the PSR also compliments the industry in the letter, praising firms' efforts to prepare thus far. 

“We know that many of you are taking steps to improve end-to-end fraud prevention and are working with Pay.UK on the implementation of the reimbursement requirement,” the letter says. “This is a significant step forward and we are encouraged by all of the work and progress in tackling APP fraud.”

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