On December 19th, the Payment Systems Regulator (PSR), an organisation overseeing banking operations, made a historic decision: starting from October 7th, 2024, banks will be obligated to refund funds to victims of authorised Push Payment frauds (APP). This move comes in response to the increasing incidents of user deception through applications, resulting in substantial financial losses.

Currently, banks are not required to reimburse stolen funds, although some voluntarily adhere to a code established in 2019. According to the latest data from PSR, only 64% of funds lost due to application fraud were returned to victims in the first half of 2023.

Here are the key aspects of the new regulations:

1. Swift Refunds: Victims reporting fraud to the bank can expect reimbursement within 5 working days. In more complex cases requiring additional evidence or inquiries, banks have up to 35 working days to process the request.

2. Additional Fees: Banks have the discretion to charge additional fees up to £100 for each request. This means that if the damage is less than £100, the money may not be refunded, except in cases where the victim falls into a “vulnerable category.” Despite consumer advocacy groups, including MoneySavingExpert.com, opposing fixed fee amounts, the PSR has upheld this decision, believing it will encourage customers to remain vigilant when making payments.

3. Maximum Refund Amount: The maximum refund per request is £415,000. PSR acknowledges the complexity of setting a uniform threshold and remains open to adjusting the amount in the future.

4. Exceptions: Compensation will not be provided if the bank determines that the victim displayed “gross negligence.” To be eligible for a refund, individuals must prove that they heeded their bank’s warnings, reported fraud promptly, shared all necessary information, and agreed to provide information about the fraud to the police.

5. Protection Measures for “Vulnerable” Customers: These are individuals particularly susceptible to “the risk of falling victim to fraud due to personal circumstances.” Such bank customers will receive additional protection, including exemption from fees and the application of “negligence standards.” Banks plan to assess the degree of “vulnerability” on a case-by-case basis.

Despite the new rules taking effect in the new year, consumers are advised to remain vigilant and promptly report fraud, with corresponding instructions already prepared.