Treasury Sub-Committee to investigate proposals for mandatory scam reimbursement
24 November 2022
The Treasury Sub-Committee on Financial Services Regulations today publishes correspondence on new proposals for banks to be required to reimburse scam victims.
The Payment Systems Regulator (PSR) is currently consulting on mandating banks and building societies to reimburse victims of authorised push payment fraud. The proposals set a high bar for gross negligence, meaning only consumers who show a significant degree of carelessness would be denied reimbursement.
Authorised push payment scams, where a payer is deceived or defrauded into authorising a payment to a criminal, have increased in both value and volume in recent years.
Last month, the Sub-Committee asked the PSR how it would prevent banks from delaying payments by routinely alleging that consumers have been grossly negligent. The Sub-Committee also asked whether the Financial Ombudsman Service (FOS) has sufficient resources to adjudicate on these decisions, and whether sanctions would be imposed on firms which routinely incorrectly allege gross negligence.
In response, the PSR outlines that reimbursement will be handled by a separate body, Pay.UK, which will monitor and enforce the scheme.
Following the correspondence, the Sub-Committee has decided to call the PSR, Pay.UK and the FOS to an oral evidence session, where they can answer further questions on the proposals. MPs are likely to use the session to explore what will count as ‘gross negligence’, how Pay.UK will implement the scheme, and the impact the proposals will have on reducing fraud.
Commenting on the correspondence, Harriett Baldwin MP, Chair of the Sub-Committee on Financial Services Regulations, said:
“Our constituents are being bombarded by authorised push payment fraudsters so combatting these crooks must be a top priority. While the regulator’s proposals are certainly a positive move in the right direction, questions remain, particularly around the interaction between the regulator and the industry body, Pay.UK. We are worried that banks could attempt to delay reimbursing their customers. That’s why we’re calling the Payment Systems Regulator, Pay.UK and the Financial Ombudsman Service to an evidence session on this important topic.”
The Sub-Committee today also publishes responses from the Financial Conduct Authority (FCA) on proposals to broaden retail access to long-term asset funds. This follows concerns expressed by the Sub-Committee on the risks to retail investors of investing in such funds.
Correspondence with the Prudential Regulation Authority (PRA) is also published on proposals to change rules around unvested pay for Material Risk Takers.
9.35am, Tuesday 13 December
Room TBA, Houses of Parliament
- Chris Hemsley, Managing Director, Payment Systems Regulator
- Abby Thomas, Chief Executive and Chief Ombudsman, Financial Ombudsman Service
- David Pitt, Chief Executive, Pay.UK
Image: UK Parliament