New changes are now in place to support crypto fraud victims. On 7th October 2024, the Payment Systems Regulator (PSR) introduced rules to help prevent Authorised Push Payment (APP) fraud.
The biggest change is that banks and other payment service providers (PSP) must enforce mandatory reimbursement frameworks. Previously, banks and PSPs only had to make voluntary refunds. Plus, there’s now a five-day deadline for APP reimbursement victims. In this blog, we’ll answer some of the key questions surrounding the latest PSR rules and explain what they mean for you.
What is the new limit for APP reimbursement?
Originally, the PSR set the upper APP scam reimbursement limit at £415,000 to match claims handled by the Financial Ombudsman Service (FOS). However, this has now been reduced to £85,000—which the PSR believes will still cover over 99% of fraud cases.
While banks and financial institutions support the new limit, it has sparked criticism. Some fear that lowering the maximum APP reimbursement could stop banks from preventing high-value fraud in the first place. Costs for reimbursing victims are also now split between PSPs, so there’s a shared responsibility. As a result, banks could focus less on preventing APP and bank fraud.
Despite these concerns, the new system introduces a much-needed minimum reimbursement standard. For the first time, a wider range of fraud victims will be eligible for compensation, with push payment fraud reimbursement costs shared between PSPs. The framework also provides more protection for vulnerable individuals, ensuring they receive the support they need.
Which banks are affected by PSR’s new regulations?
The new PSR rules apply to all UK banks and PSPs that participate in the Faster Payment Scheme—whether directly or through third parties. This means even smaller or digital-only banks still fall under the regulations if they engage in this scheme.
However, these rules don’t extend to accounts provided by Credit Unions, Municipal Banks, or National Savings Banks that don’t participate in the Faster Payment Scheme.
Banks or financial institutions outside the UK aren’t directly subject to these rules either, but if they offer payment services within the UK or use UK payment systems like Faster Payments, they must comply. The Bank of England made their intentions clear for introducing similar protections for CHAPS payments, though these aren’t implemented yet.
What exceptions are there to these new APP reimbursement regulations?
The new APP scam reimbursement rules provide increased protection if you fall victim to crypto currency fraud. But, as with any rules, there are exceptions. Banks could refuse reimbursement in some cases, including:
- Civil disputes: The rules apply only to APP fraud, not civil disputes between individuals or businesses.
- Negligence: If you ignore clear warnings about potential fraud, you may be denied APP scam reimbursement.
- Late reporting: You must report the fraud within 13 months to be eligible for a refund.
- Police reporting: The scam must be reported to the police, or you must give consent for your bank to report it.
What does this mean for crypto currency fraud?
The new Mandatory Reimbursement Requirement replaces the voluntary Contingent Reimbursement Model (CRM), which many banks used to follow. While the new framework covers most UK money transfers, it doesn’t extend to international payments or those involving cryptocurrencies. This leaves a significant regulatory gap, especially as cryptocurrency fraud continues to rise, with over £350 million lost in 2024 alone.
Right now, crypto-only platforms like Binance and Coinbase remain outside the new rules, since they don’t handle traditional flat payments through UK systems. However, as digital currencies become more mainstream, we could see this change.
Key takeaways from PSR’s new reimbursement requirements
The new PSR push payment fraud rules are now in place, so let’s run through what the changes you need to know:
- Cryptocurrency APP fraud only: The new rules only cover APP fraud, not scams involving cryptocurrency payments.
- New upper Limit: The maximum reimbursement has been capped at £85,000, which covers most fraud cases.
- Joint liability: Costs for APP reimbursement is shared between sending and receiving PSPs.
- Five-day deadline: Banks must reimburse fraud victims within five days of the claim.
- All UK banks affected: The regulations apply to all UK banks and PSPs participating in the Faster Payment Scheme, including digital-only banks.
- Future potential for crypto protections: As crypto assets become more mainstream, the PSP may introduce further protections for other crypto payments.
How WRS can help get your money back
If you’ve fallen victim to push payment fraud, WRS are here to help you reclaim what’s rightfully yours. With extensive experience in APP fraud and financial law, our expert team can guide you through this complex legal issue, ensuring you receive the support and representation you deserve. We specialise in holding financial institutions accountable and making the claims process as smooth as possible for you.
Ready to start your recovery? Get in touch with the WRS team today.
