The Financial Conduct Authority (FCA), along with the Financial Ombudsman Service (FOS), have published joint guidelines on how to deal with Authorised Push Payments (APP) fraud. These guidelines strengthen the authority of FOS and are much needed, as a report by Payment Services Regulator (PSR) discovered an alarming increase in the amount of individuals defrauded by criminals.

The payment Systems Regulator Limited (PSR) is the economic regulator for the £81 trillion payment systems industry in the UK. They aim to bring change to the payments industry and advocate for the best interests of the people and businesses that use payment systems.

APP fraud is where a fraudster tricks an individual, or business, to instruct their payment services provider, such as their bank, to send money from their account to an account controlled by the fraudster.

The fraudulent activity, in which funds are diverted into fraudulent accounts, was highlighted by consumer group Which? Who expressed concerns that consumers had no legal rights to claim back their money from fraud detection systems, which were not adequate for detecting APP scams and they could not collect enough data.

Figures from 2017 show in total there were 43,875 reported cases of unauthorised APP scams, with a total value of £236 million. 88% of this total were retail consumers, losing an average of £2,784 per case. Financial providers have returned just £60.8 million of the stolen funds.

The reason so few victims of APP fraud have been reimbursed is due to the lack of protection in place for people who have been targeted. Victims can only complain to their own banks and recipient account providers haven’t been helpful either, often citing data protection reasons for not disclosing information about who holds the account and where the money is going, making it extremely difficult for victims to retrieve stolen money.

Under new proposals from the FCA, if the victim does not receive a satisfactory response from the fraudsters bank provider, the victim can take he case to FOS, which will investigate on the consumers behalf.

The FOS already has the power to look at APP claims, but only from the banks perspective. FOS now has the power to investigate whether or not both bank providers did enough for the victim. If FOS finds the bank could of done more to stop the fraud, it will find in favour of the victim and ask for recompense on their behalf in the form of compensation.

This process should help victims who come up against stubborn banks, but solely relies on FOS to thoroughly investigate complaints made by a qualified investigator and the claim being assessed on its own merits.

Christopher Woolard, FCA executive director of strategy and competition, said: “The FCA takes push payment fraud and the harm it causes to consumers very seriously. Our proposals build on our work in this area, and seek to reduce the harm it causes to consumers very seriously. Our proposals build on our work in this area, and seek to reduce the harm experienced by victims of push payment fraud where they believe the bank that received the money did not do enough to prevent it. We are proposing to require payment service providers to handle complaints about this in line with our complaint handling rules, and to provide the victims with access to the Financial Ombudsman Service”. 

The consultation ends on 26 September 2018.

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