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The government have declared war on financial fraud, promising to amend legislation which helps more victims reclaim money they have lost. This legislation will push banks and service providers to reimburse those who fall victim to scams. Banks can currently choose whether or not to reimburse victims, however it remains voluntary.
Now, the government have announced they are readying a new legislative amendment to give the Payment Systems Regulator the power to force banks and other payment providers to provide the money lost where it is deemed fit. The government have suggested this legislative amendment will take place “when parliamentary time allows” and will be part of the financial services and markets bill.
But when would it be deemed suitable to reimburse a victim of a financial scam? Regulators would require victims to be reimbursed in cases of authorised push payment scams on designated payment systems. These systems include Faster Payments, used by banks to transfer payment quickly.
These legislative changes are intended to create fairness and support in a world where people continue to fall victim to financial scams and suffer great losses without support or financial reimbursement. Currently, for every £1 lost, only 43 pence is being returned to scam victims. It also aims to bring consistency, as many banks still do not voluntarily reimburse fraud victims.
The government have also announced regulation 90 of the Payment Services Regulations 2017 is set to be amended. This change will mean the liability framework for reimbursement will grow to include payment service providers, such as PayPal, and not just banks.
The government have also tasked The Payment Systems Regulator with publishing a draft regulatory requirement. The regulator will then be able to impose any new powers they have within six months of these provisions coming into force. They must publish a consultation on its preferred approach to reimbursement in Autumn of this year.
“The new Financial Services Bill will pave the way for the Payment Systems Regulator to force banks to compensate victims, with a mandatory reimbursement for anyone who is tricked into transferring their money to a fraudster. However, that doesn’t mean every scam victim will definitely get their money back.”