The UK’s payments regulator is not expected to make any fundamental changes to its fraud reimbursement regime following a first review, despite mounting costs for banks.
The Payment Systems Regulator may provide further guidance on aspects of the policy such as firms’ application of the customer standard of caution; however, no large shift in policy is expected.
It comes as the regulator takes stock of an independent review of the rules published this week, which found the policy has increased firms’ costs by an estimated £44mn per year, largely because of fraud prevention, claims handling and dispute management.
The costs are in addition to the £354.3mn of automated push payment fraud that banks returned to customers last year, as losses across all types of fraud rose to £1.28bn, the highest level since 2021.
“We’re taking account of the review alongside other feedback we’ve had from various stakeholders . . . but I wouldn’t see that as in any way a fundamental shift [in policy],” said David Geale, managing director at the PSR and executive director of payments and digital finance at the Financial Conduct Authority.
Any potential revisions would instead be around “clarifying particular areas”, he told The Banker.
Frontier Economics carried out the review on behalf of the PSR between September 2025 and June this year. It found that firms are reimbursing 97 per cent of claims that fall within the scope of the policy.
The number of APP scams has fallen by nearly 35,000 as a result of the policy, it said, with the biggest improvements seen by firms that had the highest APP fraud levels before the policy came into force.
Monzo fully reimbursed fewer than a fifth of APP fraud losses in the months leading up to the introduction of the rules in 2024, but earlier this year reported that its fraud reimbursements jumped 85 per cent, with “fraud losses” one driver of customer account operating costs.
The PSR will undergo a period of stakeholder engagement with industry and consumer representatives next month, ahead of a formal consultation beginning in December.
It will publish any revised legal directions in May next year.
Geale acknowledged that more “can and should be done” to address other parts of the scam value chain, such as social media firms.
“We don’t have powers over those institutions so we can’t impose something on them,” he added, describing the issue as a “matter for government”.