UK Set to Cut Maximum Fraud Reimbursement

The UK is preparing to significantly lower the maximum amount banks must refund to fraud victims, from the initially planned £415,000 to around £85,000. This drastic change follows intense lobbying from banks, fintech companies, and political figures.

Surge in Fraud Sparks Debate

Fraud in the UK payments industry has surged in recent years, with a sharp rise in authorised push payment (APP) scams. These scams often involve email account hacks that trick individuals into sending money to criminals’ bank accounts. In response, new measures were announced last year requiring banks and payment firms to reimburse scammed customers.

Initial Plans for High Reimbursement Levels

At the end of last year, the PSR declared it was “leading the way globally” in combating APP fraud and set a £415,000 reimbursement limit from October 7, 2024. However, as the date approached, concerns from both the former Conservative and current Labour governments led to intense lobbying to lower the threshold and delay the changes.

Consumer Backlash Anticipated

Consumer groups, eagerly awaiting the October start date and higher reimbursement threshold, are likely to react strongly to any decision to lower the amount following pressure from banks. The PSR previously acknowledged that the maximum reimbursement level had sparked “particularly high levels of feedback” and involved “difficult trade-offs.” The regulator also mentioned it might consider revising the level if there is compelling evidence to do so.

Final Decision Imminent

Last week, the PSR hinted on LinkedIn about upcoming documents on APP scams, including the results of its pre-implementation review of high-value claims. As the announcement approaches, all eyes are on the regulator to see how its decision might reshape fraud protection in the UK.