On 3 October 2024, HM Treasury (HMT) published a final draft of the Payment Services (Amendment) Regulations 2024, which are intended to allow payment service providers (PSPs) to slow down the processing of outbound payments when there are reasonable grounds to suspect fraud or dishonesty.
The draft Regulations are intended to support efforts to tackle authorised push payment (APP) fraud, where victims are unknowingly tricked into sending significant sums to fraudsters.
Under the draft Regulations, banks will be given new powers to delay and investigate payments that are suspected of being fraudulent, with the aim of helping to protect consumers against scammers. The maximum time that payments can be delayed will be extended by 72 hours where there are reasonable grounds to suspect a payment is fraudulent and more time is needed for the bank to investigate. This is intended to give banks more time to “break the spell woven by fraudsters over their victims” and tackle the estimated £460 million lost to fraud in 2023 alone.
Banks that have reasonable grounds to suspect a payment is fraudulent will need to inform customers when a payment is being delayed. They will also need to explain what the customer needs to do in order to unblock the payment. This need for evidence to trigger a delay aims to help protect people and businesses from unnecessary payment delays. Banks will also be required to compensate customers for any interest or late payment fees they incur as a result of delays.
Next steps
HMT plans to lay the legislation before Parliament shortly after its return from conference recess.