UK payments watchdog rejects industry calls to delay fraud refunds scheme

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The interim head of Britain's payments regulator has rejected calls from some in the industry to postpone a controversial fraud compensation scheme, two weeks after his predecessor resigned amid growing criticism of the proposals.

David Geale said the payments systems regulator must act quickly against authorized push payment fraud and that new rules would be introduced in October forcing banks and payment companies to repay victims up to $415,000 per claim.

“We will continue to work with and support the industry and take all feedback into consideration as we move forward,” he added in a statement Monday, as the industry works hard to implement the systems and processes needed for the new reimbursement requirements.

Geales' comments come after the Payments Association wrote to him saying delaying enforcement of rules on APP fraud by a year would ensure the right policies, technology and systems are in place to prevent permanent damage to the UK payments industry. no see.

According to trade body UK Finance, Britons lost an estimated $459.7 million in 2023 to APP scams, which include purchase scams, online investment schemes and criminals tricking victims into sending them money.

The payments association's call comes two weeks after Chris Hemsley quit his role as head of PSR amid industry and government backlash against the regulations.

Last month, Municipalities Minister Bim Afolami said there were serious problems with the regulator's proposals, and finance ministers have intensified public criticism of the independent watchdog in recent months.

About 30 members of the Payments Association previously complained in a letter to Apolami that the compensation changes could threaten the survival of small fintech companies. The trade body wants the refund threshold set at 30,000. Reimbursement is voluntary at this time.

The trade body told PSR in a briefing document Monday that delaying the rule would give regulators and lawmakers more time to engage technology and social media companies in the refund process.

According to UK Finance, almost 80% of APP scams start online.

Riccardo Tordera-Ricchi, head of policy and government relations at the Payments Association, said before the letter was sent that if the changes were implemented as planned, prudential risks and requirements to participate in the UK payments market would increase significantly.

He added that the increased costs and friction of real-time payments, higher risk of failure and lower profitability will reduce investment in the UK fintech market.

The industry plea comes on Geales' first day at the helm after PSR confirmed Hemsley's imminent departure late last month.

Geale has been on the PSR board since 2020 and previously served as director of retail banking at the Financial Conduct Authority, the leading financial regulator.

UK Finance has also previously raised concerns about the proposed changes, saying they risk encouraging more collusion fraud if criminals pose as victims to illegally claim compensation.

But the trade body said it was not calling for an extension of the rules and that its members were working toward the October deadline.

Consumer groups also opposed this request. Rocio Concha, director of policy and advocacy, called the Payments Association's letter a desperate attempt by some in the banking industry to avoid responsibility and said payments companies should focus on saving their customers a home to protect them from fraud.

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