UK Payments Regulatory Authority to Reduce Compensation ‍Limit for ‌Authorised Push Payment Fraud

The UK Payment Systems Regulator (PSR) is considering reducing the compensation cap for authorised push payment (APP) scams. This decision comes after the PSR analysed 250,000 fraud ⁣cases⁢ last year and found‌ that 18 of them⁣ involved losses of more than £415,000, and ⁣411 involved losses⁢ of more than £85,000.

High-value fraud‌ often involves multiple small transfers,​ which⁤ limits the effectiveness of transaction limits on risk ​management. The PSR has combined the⁣ survey results with opinions ‍from the industry ‌and the UK Financial Conduct Authority (FCA) to inform‍ its⁣ decision.

The regulator is considering reducing the ‌compensation cap from the⁤ original £415,000 to £85,000, in line with the current maximum compensation limit ⁤of⁤ the ⁣UK Financial Services⁣ Compensation Scheme (FSCS). This adjustment⁤ is expected to have a greater impact‌ on small businesses, ‌which may face financial difficulties if the compensation​ cap is not adjusted.

According ​to ​the ⁣PSR, 99 ​per cent of claims would ​be paid under the proposed payout amounts. PSR ⁢general manager David Geale stated, “We have listened to concerns about compensation limits‍ and have committed to gathering more evidence to inform our approach. As a ‍result, we are consulting on ⁤a​ limit ⁤that still strikes the right balance by covering the majority of authorised push payment frauds.”

The PSR will collect opinions on the adjustment of compensation limits by September ‍18 and decide on the final plan by the end ⁢of September.​ The new rules will⁣ take⁣ effect on October 7.

The proposed ​reduction in the ⁤compensation ⁢cap aims ⁢to strike a balance between protecting consumers and​ ensuring the long-term sustainability of the payment systems. The PSR’s decision ‍will have⁤ significant implications for‍ the payment industry and consumers alike.