Both sending and receiving banks running transactions over the UK's Faster Payments scheme will be expected to split the cost of reimbursements in the case of authorised push payment fraud, under new rules devised by the Payment Systems Regulator.
The watchdog says the new rules, which are set to come into force in 2024, will prompt more action by banks to prevent APP fraud happening in the first place.
States the regulator: "The new requirements will prompt a step change in the culture of payments to improve fraud prevention and focus all firms on protecting people."
APP fraud has quickly become one of the most significant types of fraud in the UK, with losses totalling nearly £500 million in the last year.
Consumer groups and politicians have been clamouring for banks to tackle a growing epidemic of APP fraud and to speed up the process of reimbursement for blameless victims.
Under the new rules, most APP fraud victims will be reimbursed within five business days and additional protections will be offered for vulnerable customers.
By the end of 2023 the PSR intends to publish the claim excess and maximum level of reimbursement, additional guidance on the customer standard of caution (gross negligence) and publication of all legal instruments to enorce the new regime.
Chris Hemsley, managing director at the PSR, says: “Once implemented, our changes will deliver a major shift from the status quo, giving everyone across the payments ecosystem a reason to act to prevent fraud from happening in the first place. That means everybody who makes payments can do so with much greater confidence, knowing that they will be better protected against fraudsters."
Treasury minister Andrew Griffith, welcomed the outcome: “It is right that the Government, the regulator and industry work together to ensure victims are not left out-of-pocket by fraudsters.
“In parallel, the Government is looking at how to enable banks to have the ability to identify and pause suspicious payments inflight where appropriate.”