Regulation

FCA issues new rules for banks receiving fraudulent payments

Currently, the sending bank, but not the receiving bank, must handle these complaints, but these obligations have now been extended.

Rozi Jones
|
14th December 2018
FCA new
"Victims of APP fraud can make a complaint to the PSP receiving their payment and if they’re not satisfied with the outcome, can refer their complaint to the Financial Ombudsman Service."

The FCA has published new rules allowing victims of authorised push payment fraud to complain to the payment services provider (PSP) receiving their payment.

In the case of APP fraud - where an account holder is duped into making a payment - the PSP is often a bank which holds the accounts of either the victim or fraudster.

Currently, the sending PSP, but not the receiving PSP, must handle these complaints, but these obligations have now been extended to the receiving PSP and victims can refer their complaints to the Financial Ombudsman Service if they are unhappy with the outcome. The new rules will come into force on 31 January 2019.

Following a super complaint by Which?, the FCA and Payment Systems Regulator investigated APP fraud and found that receiving PSPs could do more to identify fraudulent incoming payments and prevent accounts from being compromised by fraudsters.

Separately, a steering group established by the Payment Systems Regulator is developing a voluntary industry code, which aims to set standards for PSPs to prevent and respond to APP fraud and reimburse victims of APP fraud in certain circumstances.

UK Finance data on APP fraud show there were 43,875 cases of APP fraud and total losses of £236 million in 2017.

Christopher Woolard, executive director of strategy and competition at the FCA, said: “The FCA takes APP fraud and the harm it causes to consumers very seriously. Now victims of APP fraud can make a complaint to the PSP receiving their payment and if they’re not satisfied with the outcome, can refer their complaint to the Financial Ombudsman Service.”

 

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