New Regulations Mandate UK Banks to Reimburse Fraud Victims

New Regulations Mandate UK Banks to Reimburse Fraud Victims

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Starting in 2024, UK banks will be required to refund customers who fall victim to authorised push payment (APP) fraud, according to new rules confirmed by the Payment Systems Regulator (PSR).

Under these regulations, banks and payment companies must reimburse customers who have been tricked into sending money to scammers. APP fraud occurs when individuals are deceived into making payments to criminals posing as legitimate organisations or sellers. With APP fraud losses reaching nearly £500 million in the past year, these new measures aim to provide stronger consumer protections.

The cost of reimbursement will be split equally between the sending and receiving banks, encouraging shared responsibility in fraud prevention. Consumers will benefit from faster reimbursement, with most victims receiving their money back within five business days. The rules also promise additional protections for vulnerable individuals and consistent minimum standards across the industry.

These new regulations will apply to high street banks, building societies, and smaller payment firms operating within the UK. However, they won’t cover civil disputes, cash transactions, or international payments.

The implementation timeline aligns with the expected passage of the Financial Services and Markets Bill, with the new rules coming into force in 2024. While offering increased protection, the PSR acknowledges that customers will still need to exercise caution when making payments.

By mandating reimbursement, the PSR aims to significantly improve fraud prevention and consumer protection in the UK banking sector. These regulations are designed to incentivise all parties in the payment ecosystem to take proactive measures against fraud.

CCA Financial will continue to monitor these developments and provide updates on how they may affect our clients and partners.

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