Responding to the publication by the Authorised Push Payment Steering Group of its draft Voluntary Code for consultation, Stephen Jones, Chief Executive of UK Finance said:

“The finance industry is committed to ensuring consumers are better protected from the threat of authorised payment scams. Today marks an important milestone in helping us achieve that. Over the last six months we have been working closely with the consumer groups and the regulator to develop this draft Voluntary Code for consultation setting out clear requirements for consumer protection and the principles for reimbursement. The industry is committed to now continuing work with partners to identify a sustainable funding mechanism through which to reimburse consumers.

“It is vital that we get the right outcome for customers and prevent the UK from inadvertently becoming a magnet for fraudsters, while ensuring innocent victims and customers are not penalised for the criminal actions of others. It has become clear through our discussions that some of the issues identified must be resolved by new regulation, rather than just a Voluntary Code alone. This will ensure that consumers and financial institutions can be certain in what circumstances victims will be compensated and how this compensation is funded in circumstances where all parties have acted reasonably in making the payment. We are keen to work with regulators and government to put these measures in place as soon as possible.

“At the same time the industry is fighting fraud on every front, investing millions in security systems, introducing new standards to ensure scam victims get the help they need from their payments provider, supporting law enforcement in disrupting the criminals and assisting the government in improving intelligence sharing.”

Notes to Editor  

  1. The industry has always supported the development of a Voluntary Code which sets out the standards expected of payment service providers (PSPs) in detecting, preventing, and responding to authorised fraud, such as targeted warnings to consumers and the use of systems to support anti-fraud measures such as Confirmation of Payee. Industry representatives have agreed a draft Voluntary Code, published today for consultation, which sets out the circumstances in which PSPs will provide redress where it is accepted that in making the compromised payment the PSPs have not met appropriate standards and the consumer has met the appropriate standard of care.
  2. To support the adoption and implementation of the standards which underlie the draft Voluntary Code, the industry believes the introduction of new regulations would provide more clarity and certainty in order to specifically:
    • Resolve the current absence of a legal definition of “gross negligence” which at the moment results in a lack of clarity for both consumers and PSPs.
    • Give PSPs receiving funds clarity over their liability. Many accounts which are ultimately used by criminals to launder money are legitimately opened and operated by genuine individuals, before later being used as a ‘money mule’ account. Automatic liability for the PSP receiving funds could result in a large number of consumers who have a similar profile to a typical money mule being penalised for the criminal actions of others. For example this may mean primarily young British nationals or international students having difficulties in retaining or getting access to the financial system due to a PSP’s unwillingness to incur the potential, albeit small, risk.
    • Provide PSPs with certainty regarding how their responsibilities under the Voluntary Code sit with other requirements such as Open Banking and how liability is allocated where a third party is used by a consumer to make a transaction.
    • Clarify the ability of PSPs to freeze the proceeds of fraud, which under current law is difficult even if the National Crime Agency has granted ‘consent’ to a Suspicious Activity Report.
    • Give PSPs a legal power to take fraudulently obtained money from an account in order to return it to another bank to reimburse a victim, without the need for a court order.
  3. UK Finance has published data on authorised push payment fraud in the first half of 2018. The data shows that there were 31,510 cases of APP scams on personal accounts in the first six months of 2018 with losses totalling £92.9 million. Financial providers were able to return a total of £15.4 million of these losses.
  4. UK Finance has provided the secretariat for the Payment Systems Regulator’s steering group which was announced in February.
  5. The finance industry is tackling fraud by:
    • Helping customers stay safe from fraud and spot the signs of a scam through the Take Five to Stop Fraud campaign, in collaboration with the Home Office.
    • Joining with government and law enforcement to deter and disrupt the criminals responsible and better trace, freeze and return stolen funds.
    • Implementing new standards to ensure those who have fallen victim to fraud or scams get the help they need.
    • Delivering the Banking Protocol – a ground-breaking rapid response scheme through which branch staff can alert police and Trading Standards to suspected frauds taking place. The system is now operational in every police force area and in the first six months of this year prevented £14.6 million in fraud and led to 100 arrests.
    • Sponsoring a specialist police unit, the Dedicated Card and Payment Crime Unit, which tackles the organised criminal groups responsible for financial fraud and scams. In the first half of 2018, the Unit prevented £25 million of fraud and carried out 84 arrests and interviews under caution.
    • Working with the Information Commissioner’s Office to establish guidance on how information about APP scams can be shared between UK Finance members, so they can protect their customers, while calling for new powers on information sharing to allow banks to share data to detect and prevent financial crime better.
    • Hosting the Government-led programme to reform the system of economic crime information sharing, known in the industry as Suspicious Activity Reports, so that it meets the needs of crime agencies, regulators, consumers and businesses.
  6. UK Finance is a trade association formed on 1 July 2017 to represent the finance and banking industry operating in the UK. It represents around 300 firms in the UK providing credit, banking, markets and payment-related services. The new organisation brings together most of the activities previously carried out by the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association.
UK Finance response to the APP scams steering group’s draft voluntary code