New PSR Industry Code Entitles Victims of Fraud to Reimbursement

The new code aims to avoid customers being penalised for fraudsters’ actions.

Estimates indicate that fraudsters stole £1.2 billion from UK bank accounts in 2018 — a 16% increase on the previous year. UK Finance has described fraud as a “major threat to the UK”, and has confirmed that the finance industry is committed to tackling the issue. However, developments in banking that have led to quick and easy payment methods, combined with increasingly sophisticated cyber scams, mean that fraudsters continue to flourish.

There has been a particularly significant increase in authorised push payment (APP) fraud, in which a customer is tricked into making a payment to another account that is controlled by a criminal. Historically, victims of this sort of fraud have struggled to retrieve their money — only 23% of losses were returned last year.

However, following a Which? super-complaint, the Payment Systems Regulator has published a voluntary industry code for the reimbursement of those who have suffered APP frauds. The code came into effect on 28 May, and so far 16 banks / payment service providers have signed up. The code provides that customers will be reimbursed in all circumstances in which they have done everything expected of them under the code.

The charts below compare banks’ legal liability to customers with the position under the new code.

Click for larger image.