In a controversial decision, the Payment Systems Regulator (PSR) plans to significantly lower the maximum reimbursement for victims of authorised push payment (APP) scams from £415,000 to £85,000. This change follows strong lobbying from banks and payment companies, which argued that the previous limit was excessively high and could be exploited by fraudsters. The new cap, now aligned with the Financial Services Compensation Scheme limit, marks a substantial reduction in consumer protection for those targeted by sophisticated scams. In 2023, APP scams resulted in losses of £459.7 million for Britons, as reported by UK Finance.
Consumer advocacy groups have reacted strongly against this proposed change. Rocio Concha from Which? described the decision as “outrageous,” warning that it could leave victims of high-value scams vulnerable to “devastating financial and emotional harm.” She also criticized the timing of the announcement, which came shortly before the new reimbursement rules were set to take effect on 7 October.
The banking sector has defended the PSR’s decision, arguing that the original £415,000 limit might have incentivized fraudsters to target banks for large refunds, potentially jeopardizing smaller firms due to the financial burden of reimbursements. Both Labour and Conservative Treasury ministers have reportedly expressed concerns regarding the initial rules.
This development aligns with a report from the Financial Ombudsman Service (FOS), which noted a record number of fraud and scam complaints from April to June 2024, with 8,734 complaints received—over half of which were related to APP scams. The PSR’s move to cut the reimbursement limit raises important questions about the balance between consumer protection and the concerns of the financial industry. As fraud tactics continue to evolve, it remains uncertain how effective these new measures will be in deterring scammers while still providing adequate protection for victims.
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