The Financial Services and Markets Act 2023 now has its Royal Assent and is therefore law in the UK. Part of this places requirements on the PSR to mandate reimbursement on Payments forms for APP in certain situations. 

On the back of last year’s consultation, there is now have the proposals as I covered here. There is now a further consultation on the following two elements for Faster Payments: 

• Setting the Level of Excess 
• Setting the Level of Max amount of refund 

This consultation close on 12th September, with the expectation that the rules will all be agreed before the year end and come in to force around end Q1/start of Q2 2024. 

What are the details of the consultation? 

Excess 

Proposed three options: 

• A fixed value excess 
• A percentage excess 
• A percentage excess with a cap 

The factors influencing the setting of the excess level that have been identified are: 

• Need to incentivise customer to be careful 
• Help avoid operational issues with large volumes of small claims 

• Make it easy to understand 
• Minimise losses to victims 

Questions cover these areas: 

• Should firms be free to apply the excess partially or not at all, rather than being forced to apply it? 
• Which of the three options to implement? 
• What level of excess? 
• Why that level with any data? 
• Should it be static or change of time, e.g. with inflation? 

• Also ask if these are correct? 
• Are there are other factors at play here to be considered? 

Setting the maximum level of excess 

Proposal is for £415k cap, in line with current FOS limit, covers 98.98% by value.

Questions cover these areas: 

• Should the max limit be the same for all, including the vulnerable? 

• Are there are other factors at play here to be considered? 

The factors influencing the setting of the maximum level that have been identified are: 

• Level of PSP liability 
• Ability to cover the majority of cases 

• Coverage of all types of cases 

Also, there is a proposal for the CHAPs limit (set by the BOE) to be set at the same level, with similar questions in the consultation. 

On balance it must be said that the maximum limit seems fair. In terms of the excess of 5-10% percentage with a cap in the £100-£500ish range seems a potential outcome. 

Overall, this would mean that the majority of victims get a refund of most of their losses, even for small or large amounts, whilst requiring customer caution, however, there might be a lot of small cases requiring lots of automation. 

This would firmly set the UK as the best place to be a victim of scams at least a s consumer. Banks & payment firms now need to take steps to limit fraudulent transactions in the first place as well as reducing mules and onward transmission of funds to reduce their liability here, through greater data sharing throughout the customer lifecycle. This now sets up a next stage of further liability push to big tech platforms. 

About CYBERA 

At  CYBERA  we’re on a mission to stop money laundering and help protect customers from scams and other financial cybercrime. We close gaps that allow cyber criminals to thrive by sharing crime data in real-time with financial institutions, fintech, and crypto exchanges, and coordinating a global response to support customers who have become victims of financial cybercrime.   

CYBERA WATCHLIST™ helps support firms to reduce fraud and money laundering and meet regulatory requirements as part of a holistic fraud and financial crime strategy.   

Financial Institutions (FIs) can check against the CYBERA WATCHLIST™ for confirmed mule accounts when processing payments. For outbound & inbound payments, where there is a match on either IBAN (Account Number & Sort code) or on Name the transaction can be flagged as high risk.   

At account opening and ongoing CDD, email, phone and name can be used to match to CYBERCRIME WATCHLIST™ to reduce opening new mule accounts.   

CYBERA VSR™ further supports by providing users with alerts of any of their accounts reported as mules directly in their dashboard.   

Unlike other data sources, CYBERA is a global solution, so is well placed to support the increasing levels of cross-border real-time payments.