Committees

Treasury Committee: Proposals to reimburse scam victims “half-baked”

4 March 2023

New proposals to reimburse scam victims are "half-baked” without further action from the regulator, the Treasury Committee says today.

  • Correspondence can be found here.

New financial regulations being considered by the Payment Systems Regulator (PSR) will require banks and building societies to fully reimburse victims of authorised push payment scams where the loss is over £100.

Authorised push payment fraud, where a scammer tricks someone into sending them a payment, is widespread. At least 196,000 consumers lost £583 million to these scams in 2021 according to UK Finance.

Last month, the Treasury Sub-Committee on Financial Services Regulations, which scrutinises regulatory proposals, questioned why fraud under £100 would not be refunded. In a response published today, the PSR reveals that 24 per cent of all authorised push payment scams were for transactions less than £100.

The regulator outlines that it is aligning with the minimum reimbursement level for credit card fraud, although it acknowledges this figure was last updated in 1983.

The PSR says that consumers who show ‘gross negligence’ do not, in most circumstances, need to be reimbursed. The Committee had asked what actions would count as gross negligence. In response, the regulator outlines that the meaning will be clarified as complaints begin to be arbitrated by the Financial Ombudsman Service (FOS). The Committee is concerned that this is a recipe for further delay in scam victims getting their money back.

Chair's comments

Commenting on the correspondence, Harriett Baldwin MP, Chair of the Treasury Committee, said: 

"Fraud is on the rise and our constituents are being robbed. Regulators need to get their skates on and sort out all of these exclusions and criteria quickly. Our Committee will keep up the pressure so that implementation is not dragged out or half-baked."

Scam victims within the same bank

Separately, the MPs asked the Financial Conduct Authority (FCA) whether fraudulent transactions within the same bank will miss out on mandatory reimbursement protection. In response, the regulator agrees in principle that these scams should be reimbursed, but outlines that it does not currently have the regulatory powers to enforce this. The FCA reveals it is working with the Treasury on a potential legislative fix.

House purchase fraud

In a letter to the Bank of England, the Committee questioned why high-value transactions made through CHAPS, such as house purchases, are not included in the reimbursement proposals. These scams amount to four per cent of all fraud by value.

The Bank responds that it is considering the Committee’s report and will develop a clearer plan on reimbursing high-value transactions in the coming weeks.

Financial Ombudsman disputes

The Committee also asked whether the slow resolution of reimbursement disputes by the FOS could undermine the proposals by delaying how quickly consumers can challenge a bank’s refusal to repay their money. In response, the FOS outlines that it is introducing a new banking team to speed up complaint resolution. The Ombudsman reports that average waiting times have dropped from 6.4 months in 2021-22 to 3.7 months at the end of last year.

Further information

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