On 28 September 2018, the Authorised Push Payments (APP) Scams Steering Group (a body established by the Payment Systems Regulator) published a consultation on a draft voluntary code designed to help stop APP scams from happening and protect consumers when they do.
APP scams are where people are tricked into sending money to a fraudster. According to statistics published by UK Finance, consumer losses on APP scams in the first half of 2018 totalled £92.9 million across 31,510 cases. The amount of money returned to consumers was £15.4 million (or 16.5% of the total value), which is made up of partial or total recovery of the funds as well as goodwill payments made by firms in some cases.
Importantly, the draft code proposes the principle that where a consumer has met their requisite level of care, they should be reimbursed. However, the Steering Group has identified that there may be instances where a victim of an APP scam has met their requisite level of care, and so should be reimbursed, but no bank or other payment service provider involved in the payment journey has breached their own level of care. The Steering Group has not been able, so far, to resolve the question of who should meet the cost of reimbursements in these circumstances.
In addition, the Steering Group is continuing its work to consider:
- what should happen when both firms and customers have not met their levels of care;
- the evidential approach that will underpin the code;
- a mechanism for inter-firm allocation of reimbursement costs and dispute resolution between firms; and
- the governance of the code once it is finalised.
The deadline for comments on the draft code is 15 November 2018. The intention is that the draft code will be finalised in early 2019.
Until the draft code is agreed and published it is not in force. However, retail banks represented on the Steering Group have individually committed to start work towards implementing the standards of the draft code during the consultation period.
In the period between now and the publication of the final code, until a funding solution is identified for the scenario where all parties have met their expected levels of care, customers in this scenario will not be reimbursed (unless firms decide to make a goodwill payment). The Steering Group intends to revisit whether these victims could be reimbursed once the funding mechanism has been agreed. Once a final code is issued, retail banks represented on the Steering Group have individually committed to implementing the final code in full in early 2019. The Steering Group hopes that all firms will follow this example, though it is acknowledged that the timeframes for firms to implement all elements of the code will vary. Firms are urged to do what they can to raise standards and improve customer protections between now and the publication of the final code, and after that to implement the full code as quickly as possible.