Govt to force banks to compensate fraud victims
The government has promised to amend legislation in an effort to help more victims of authorised push payment scams to be reimbursed by banks and payment service providers.
Currently, banks are encouraged to voluntarily reimburse victims when a payer is deceived or defrauded into authorising a payment to a criminal.
Now, the government has said it will introduce a legislative amendment “when parliamentary time allows” to give the Payment Systems Regulator the power to force firms to reimburse victims where it deems fit.
The amendment, part of the financial services and markets bill, will allow the regulator to require reimbursement to victims in cases of authorised push payment scams on designated payment systems, including Faster Payments – the electronic rails used by banks to transfer payments more quickly.
Banks will not be the only parties responsible for reimbursing victims. Regulation 90 of the Payment Services Regulations 2017 is also set to be amended, in order to establish a liability framework for reimbursement which could also involve payment service providers.
The legislative changes are intended to bring consistency to a scam landscape where “many victims [are] continuing to suffer losses without reimbursement”, the government said in an announcement today (May 10).
Some banks still have not made voluntary commitments to reimburse victims, and those that have are disparately interpreting their obligations, according to the government.