The PSR is proposing that the 12 largest payment service provider (PSP) groups in Great Britain, which include most of the UK’s High Street retail banking brands, along with the two largest PSPs in Northern Ireland outside those PSP groups, will have to publish comparative data on levels of APP scams, on reimbursement levels for their customers that are APP scam victims, and on which PSPs accounts are receiving the fraudulent payments.
Mila Pencheva, financial services expert of Pinsent Masons, said: “We anticipate this is data the designated PSPs already monitor and collect. However, putting this data in the format the PSR expects and ensuring it fully covers the proposed metrics will likely require some operational effort by PSPs”.
“PSPs explicitly caught by the proposals should already be assessing what changes they need to make to their data gathering processes, as well as the associated costs, to comply with the proposals. Arguably, all PSPs should consider whether they should start gathering the proposed data metrics both to ensure appropriate protection of their customers and to anticipate any potential future widening of the scope of the direction,” she said.
The PSR also recommended making reimbursement of APP scam victims mandatory. This would require legislative changes which, according to the PSR consultation announcement, are on the UK Treasury agenda.
“Making reimbursement for scam victims mandatory would be ground-breaking for the industry but may come at a high cost for PSPs,” said Barber. “The proposals will likely result in PSPs having to provide increased pay-outs and put complex systems and processes in place to comply with the new rules. Those changes may have a disproportionate impact on smaller PSPs but equally users of those PSPs should be afforded the same protections so as to create a level playing field.”
David Crossan, an expert in APP fraud litigation, said: “A separate concern is whether this creates a new type of APP Fraud by the back door. We have acted on a number of claims where the potential claimant is suspected of playing some role in the fraud, even passively or in a very minor way. The checks and balances on mandatory reimbursement will be critical to ensure the PSPs can still defend themselves again claims where there is a question mark over the appropriateness of claimant’s conduct and query how this will be assessed.”
The PSR said it would task the financial services industry with improving intelligence sharing between payment service providers (PSPs) to improve scam prevention.
In addition to the three main proposals in the consultation paper, the PSR said it would also be exploring the balance of liability between sending and receiving PSPs, and developing proposals on how it could use its existing powers to address any issues.
The regulator will examine the value of voluntary action by PSPs and facilitate industry coordination to bring voluntary efforts together.