Victims of bank transfer fraud ‘could be left out of pocket under watered-down rules’

New rules to protect bank customers who are tricked out of money by criminals are at risk of being watered down and leaving victims out of pocket, it has been claimed.

Consumer champion Which? said the Payment Systems Regulator (PSR) is suggesting some troubling amendments to legal protection for those who fall foul of authorised push payment fraud (APP).

What is APP fraud?

APP fraud involves someone being tricked into transferring money from their bank account to a criminal.

A total of £485.2m was lost to reported APP fraud in 2022. But the real figure is probably a lot higher as many incidents are believed to go unreported.

New rules

The original plans for new rules being introduced next year would have seen victims getting their money back in all but exceptional cases. But now, the PSR are suggesting watering down that protection.

What’s changing?

The scheme was due to be introduced on 2 April 2024. This is now being pushed back by at least six months until the following October. As well as the delay in implementation, the PSR is also suggesting:

Claims excess

Originally, it was suggested any excess charged would be limited to £35. The PSR has now suggested introducing an excess of £100 or £250 to encourage customers to be more cautious.

Which? has called for plans for an excess to be scrapped. It argues the measure would disproportionately affect lower-income groups.

Industry data also shows 32% of APP fraud is for sums of less than £100, meaning an excess of £100 would exclude nearly a third of all claims.

Maximum amount victims can get back

The PSR has also made a U-turn on the maximum amount people can be reimbursed. Previously, it said there would be no upper limit. It is now saying there will be and it will consult on the appropriate level.

Burden of responsibility

The PSR has also made it clear that victims will bear the burden of responsibility to prove they demonstrated sufficient caution before transferring money. This means victims will not get their money back if any of the following apply:

• They failed to pay attention to specific, directed warnings from their bank before making a payment.
• They failed to report the fraud quickly. This means no more than 13 months after the last payment was authorised.
• They fail to respond to requests for information from their bank.

Final version of the rules

The PSR is due to publish its final suggestions for the new rules before the end of the year.