Shearman & Sterling LLP | FinReg | Payment Systems Regulator Publishes New Rules for Mandatory Reimbursement of Authorized Push Payment Scams
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  • Payment Systems Regulator Publishes New Rules for Mandatory Reimbursement of Authorized Push Payment Scams


    The Payment Systems Regulator has published its Final Policy Statement on its new regime for fighting authorized push payment scams. The Financial Services and Markets Act 2023 (discussed in our client note, “A Boost for UK Financial Services”) imposed a new obligation on the PSR to require payment service providers to reimburse consumers when a payment is executed over the Faster Payments Scheme and the payment was executed following fraud or dishonesty. Under the PSR's final policy:
    • PSPs who have sent the funds will be obliged to reimburse customers who have fallen victim to APP scams up to a maximum of £415,000 for a single APP scam (although PSPs may choose to make reimbursements in excess of that).
    • PSPs will be entitled to charge an excess of up to £100 per claim.
    • PSPs will not be liable to reimburse consumers who have been grossly negligent (the so-called consumer standard of caution exemption). However, a PSP may not deny reimbursement to a consumer that is vulnerable. The PSR has published a Consumer standard of caution exception notice and related guidance on the approach to this exemption.
    • A time limit will be imposed, meaning PSPs will not be required to reimburse consumers where the claim is made more than 13 months after the final payment is made under the APP scam.

    The requirements will apply from October 7, 2024, capturing all payments made after that date. The PSR has published three Specific Directions implementing the new regime:
    • Specific Requirement 1, which requires Pay.UK, the operator of the U.K. interbank retail payment systems (including Faster Payments), to include the reimbursement requirements in the Faster Payments Scheme rules;
    • Specific Direction 19, which imposes additional obligations upon Pay.UK, including monitoring and improving compliance by PSPs with the rules and reporting to the PSR on the extent of compliance; and
    • Specific Direction 20, which directs relevant PSP participants in the Faster Payments System to comply with the new reimbursement rules to ensure the rules capture both members and non-members of the Faster Payments System.