Summary
This article explores the recently published APP Scam Performance report (the “Report”) and what this tells us about the current incarnation of the Contingent Reimbursement Model (“CRM”), banks and the treatment of consumers. In addition, we will be looking at what banks and consumers should be thinking about following the publication of the Report.
The Report
In October 2023, the PSR published its first APP Scam Performance report. Data was collected on three key areas:
- Reimbursement to victims.
- How much money is sent from each payment firm as a result of APP fraud.
- How much money is received by each payment firm as a result of APP fraud.
The Report covers the period of January – December 2022 and 95% of the payments made via Faster Payments in the UK. Data has been provided by the 14 largest banking groups in the UK. The Report is groundbreaking as it allows consumers to see how well banks and payment firms are dealing with APP fraud. It provides a transparency which was never available previously and it is made up of the most comprehensive data ever collected in this area.
So how does that data effect banks and consumers respectively?
Banks
The PSR is clear in that it did not want to be drawn into debate and provide comparators or state what would be considered good or bad. However, this is only on the basis that this is the first iteration of this Report and when the next report is published in 2024, the PSR has made it clear that it expects to see a significant change in the data due to the introduction of mandatory reimbursement.
At present, there are clear inconsistences in the performance of individual banks. It is noted that some banks which have introduced their own fraud promise (and not signatories to the CRM) are among those with the highest reimbursement rates. For instance, TSB reimbursed 91% of its customers. There are nuances to this which may cause an overstatement of this figure, however, the PSR does not consider that this would have any material effect on the ranking of TSB.
Banks are encouraged to take more steps to educate their customers, as well as take a more proactive approach in real time with other payment firms to tackle fraud with an open dialogue and data sharing being tantamount to this.
It could be considered that those banks/payment firms who are seen to make real efforts to assist and educate their customers will potentially gain a larger market share of consumers and have a higher level of customer trust and satisfaction. In comparison with TSB, AIB have only reimbursed 10% of the total APP fraud losses reported (albeit that they are not signatories of the CRM). Another good example of a bank providing extra care is Nationwide. They have a scam checker service where a customer can discuss a payment with Nationwide. If that payment turns out to be fraudulent then Nationwide will fully reimburse the customer. This is potentially the start of a new wave of intervention that other banks may adopt.
In addition, the PSR has also noted that the newer and smaller payment service providers have a disproportionately higher rate of accounts receiving funds as a result of an APP fraud. This would indicate that there is significant room for improvement with those smaller companies.
Consumers
The Report allows customers to understand how they may be treated by their bank if they are a victim of APP Fraud.
Whilst it may be too soon for there to be any ‘voting with feet’ it is certainly something that banks may wish to bear in mind.
Customers want to have reassurance that should they find themselves a victim of APP fraud, that their banks will not only support them but will reimburse their funds without elongating what is already a traumatic situation. Customers will want to be with a bank who has a consistent reimbursement rate. Hopefully with the advent of the new mandatory reimbursement requirement (due to come into force in October 2024) soon the majority of banks will meet this standard.
Conclusion
Mandatory reimbursement will be a huge step forward in terms of consumer protection from APP frauds. Its advent will encourage banks to co-operate with each other more fully, educate their customers and provide reimbursement within 5 days in all but the most exceptional cases.
We wait with interest to see how the Report changes over the next two years once the requirement is bought into force in 2024. Until then consumers should be alive to the Report and its content and not be afraid to move their banking services if they are not getting a good standard of care.
How can we help?
The team here at Tenet are approached frequently by victims of Authorised Push Payment fraud (where false bank account details are provided to a party leading to misdirected payments), or events where banks are alleged to have failed in their financial crime compliance checks. If you have been targeted by APP Fraud you should contact your bank immediately with the date, time, and amount of the fraudulent transaction as well as any other relevant details and evidence you have. From the outset it is important to keep a record of all communication and details relating to your claim. If your bank cannot resolve your issue, you can escalate your claim to the Financial Ombudsman Service for APP compensation.
In some cases, once the steps above have been followed Tenet may be able to offer professional guidance. If you would like to discuss your claim, please email your details (providing as much information as possible) to hello@tenetlaw.co.uk.
We hope this article has provided valuable insights and information on Authorised Push Payment fraud. Our team of specialist fraud and financial crime lawyers are dedicated to providing up to date and engaging content on disputes and compliance law relating to fraud and financial crime from a legal perspective. If you have any specific topics or interests that you would like to see covered in The Tenet Fraud Hub or would like to contribute your own perspectives, please reach out to paula.crowther@tenetlaw.com
The author of this article is Rebecca Craig an experienced litigation lawyer specialising in Authorised Push Payment Fraud cases supporting clients who have been victims in this area and working with the banking industry around the Contingent Reimbursement Model (CRM).
