Payments regulatory news, August 2020 #2

Hogan Lovells

Hogan Lovells

Recent regulatory developments focussed on the payments sector. Reports on the latest from the UK Payment Systems Regulator (PSR).


  • APP scams: PSR call for improvements
  • Real-time payments: PSR views on driving innovation and competition

APP scams: PSR call for improvements

The Payment Systems Regulator (PSR) has published a document in which Genevieve Marjoribanks, PSR Head of Policy, sets out how the PSR wants to see improvements relating to reimbursing the victims of authorised push payment (APP) scams.

Reimbursing victims of APP scams remains a top priority for the PSR. It acknowledges that since the Contingent Reimbursement Model (CRM) Code was introduced in May 2019, positive steps have been taken. However, the PSR wants to see the industry doing more. In particular, the PSR wants to see the following improvements:

  • repatriation or reimbursement should occur in the vast majority of APP scam cases assessed under the Code; and
  • a sustainable, long-term model for reimbursement needs establishing as a matter of urgency.

The PSR believes the most obvious option for funding reimbursement is by payment service providers (PSPs) committing to self-funding these costs. It is happy for those Code signatories who choose to participate in shared funding to continue to do so, subject to their obligations under competition law. However, if the current voluntary approach is to continue, the industry needs to move away from temporary commitments and towards a permanent solution that focusses on reimbursing defrauded consumers who have done nothing wrong.

The Lending Standards Board (LSB) has recently issued a consultation to inform its review of the Code, which includes the future funding of reimbursement. The PSR welcomes the review and is keen to see the outcomes it produces.

If the voluntary approach under the Code proves unsuccessful, the industry needs to find a way to embed a high standard of consumer protection as the norm. The PSR emphasises that improving outcomes for victims of APP scams is an issue requiring an urgent effort from the entire payments sector.

Real-time payments: PSR views on driving innovation and competition

The PSR has also published a statement by Genevieve Marjoribanks on driving innovation and competition in real-time payments.

Ms Marjoribanks explains that innovation is at the heart of everything the PSR does, and the best way to deliver world-leading real-time payment services is through competition and innovation. She goes on to say that the PSR wants to identify new ways to drive competition and innovation in interbank payments, while ensuring that they serve the best interests of everyone who uses them.

The PSR is looking at what consumer protections are available now and whether they adequately protect people who use bank transfers to make payments. It wants to achieve greater protection for people when making and receiving payments. With this in mind, the PSR is assessing what else it and the payments industry can do to achieve this. As part of its ongoing work, the PSR aims to address the following:

  • What benefits could various types of protection offer consumers, from refunds and guarantees to transaction-risk analysis and improved communication between banks and their customers?
  • What role do fledgling innovations, such as digital identity, have in the identification of payers and authentication of payments?
  • Are new measures necessary to continue to safeguard consumers, or can the PSR be confident that the market will provide consumer protection solutions without the need for regulatory intervention?
  • If additional protections are necessary, should they be introduced by individual payment service providers or should the Faster Payments Service (FPS) itself have additional protections built into it?

Ms Marjoribanks also discusses open banking and the potential growth of the FPS, and refers to the PSR's work on APP scams.

At this stage, the PSR is just sharing its thinking and proposed approach. Going forward, it will work with HM Treasury and the Open Banking Implementation Entity, as well as with the industry, to ensure there is a cohesive approach, and avoiding duplication, to achieving the best outcomes for consumers.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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