New mandatory reimbursement for Authorised Push Payment (APP) Fraud

The issue of Authorised Push Payment (“APP”) Fraud has been widely reported, and occurs when victims are tricked into transferring money via bank transfer to a fraudster. As detailed in our previous blog: Ellis Jones Success for Fraud Victim – Authorised Push Payment Code, Ellis Jones have previously assisted a number of individuals that have sadly fallen victim to such scams, and been able to recover sums lost from victims’ banks.

From 2018, a number of banks recognised the problem with APP Fraud, and signed up to the CRM Code. Whilst this saw progress for victims of APP fraud, banks were not required to sign up to the code, and it was only a voluntary scheme. This in turn meant that those that had fallen victim of APP scams were not always able to recover the sums that they had lost through their banks, and there were also a number of hurdles victims would need to overcome in order for their bank to pay out.

The new regime

The Payment Systems Regulator (“PSR”), who regulates the banks for such issues, have recognised the shortcomings with the CRM Code, and therefore introduced new mandatory reimbursement rules. The new protections apply to all UK payments made on or after 7 October 2024.

The new rules mean that banks should reimburse victims of APP Fraud within 5 business days of a claim being made. Whilst banks can ask for more time to review the circumstances of the fraud, this assessment should not take more than a maximum of 35 business days.

There is also a maximum amount which can be claimed under the regime, £85,000, but the PSR say this will cover 99% of all APP Fraud claims. Whilst it is not mandatory for banks to refund sums over this amount, they may still choose to do so on a voluntary basis.

Those applying for a refund of sums lost to APP Fraud should be aware that banks are entitled to apply an excess of up to £100, to be deducted from any sums refunded. However, this cannot be applied to vulnerable customers, and it is not yet clear which banks will decide to charge an excess.

Victims can still recover sums in excess of the £85,000 cap under the mandatory reimbursement rules via claims to the Financial Ombudsman Service (“FOS”). Our previous blog here: What does the Financial Ombudsman Service do, and should you refer your complaint to them?, details what the FOS do, and how to make a complaint to them. The current compensation limit that the FOS are able to award is £430,000 for complaints referred to them after 1 April 2024. This therefore means that those that have lost more than the £85,000 maximum award have another avenue to seek recovery of their losses.

How Ellis Jones can help

Customers that have fallen victim to scams and fraud should consider carefully the options available for recovery of funds. Our specialist Banking and Finance Litigation team can advise and assist you in gathering evidence and submitting an initial complaint if you believe you have been the victim of a scam or fraud.

Please do not hesitate to contact our Banking and Finance Litigation team by calling 01202 525333 or by email at banking@ellisjones.co.uk.