UK Payment Systems Regulator Tackles Payment Scams

The Payment Systems Regulator (PSR) has published draft “Terms of Reference” outlining how it intends to review whether the operators of CHAPS (Clearing House Automated Payment System) and Faster Payments Scheme (FPS), need to play an expanded role to reduce consumer harm caused by particular types of payment scams.

The PSR said this follows a “super-complaint” submitted by consumer group, Which? raising concerns that there is not enough protection for people who are tricked into transferring money to fraudsters – described as an” authorised push payment (APP) scam”.

The PSR is now seeking feedback on these draft terms of reference, with responses due by 21 March 2017. A final report is due in the second half of the year.

Hannah Nixon, Managing Director of the Payment Systems Regulator, stated:

“Late last year we found that authorised push payment fraud was a significant problem and so we set out a package of work to help tackle these scams. Our proposed Terms of Reference show how we plan to build a clearer picture of the role payment system operators might play in better protecting consumers. All along the payments process action needs to be taken to bolster the level of consumer protection. Detection and prevention is a vital part of combatting fraud and the payment system operators could play an important role in achieving this. From banks and building societies, to payment system operators, businesses and customers themselves, everyone has a part to play if we are to be successful.”

According to the PSR, under the proposed Terms of Reference, the work would examine the approaches taken to preventing and responding to push payment scams in other countries, whether lessons can be learned from approaches taken by other payment systems and in relation to other types of disputed payments.

The PSR has two objectives in this project:

  • To consider whether it would be effective and proportionate for operators of payment systems typically used for push payments to play a greater role in preventing and responding to APP scams. This might be in the form of actions that the operators might take, or new requirements that the operators might place on payment service providers using their systems, for example.
  • If the PSR concludes that new measures are appropriate, it will consider whether it would be best to introduce them through regulatory action or via other avenues, such as an industry-led approach. If a new regulatory approach is required then the PSR will develop proposals for consultation.

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