Authorised push payment (APP) fraud is where a fraudster tricks an individual consumer or micro business to instruct their payment services provider (PSP), such as their bank, to send money from their account to an account controlled by that fraudster.
UK Finance data on APP fraud show there were 43,875 cases of APP fraud and total losses of £236 million in 2017.
Where their own PSP is not at fault, victims of APP fraud cannot at present complain to the PSP receiving their payment. The FCA is consulting to require firms to handle these complaints in line with complaints handling rules in the FCA Handbook.
The FCA is also proposing to allow eligible complainants to refer these complaints to the Financial Ombudsman Service if they are unhappy with the outcome reached by the receiving PSP, or if they have not received a response to the complaint at all.
The FCA also plans to consult, later in the year, on requiring PSPs to report data on the complaints about alleged APP fraud that they receive. This data can be used by the industry as an indicator of progress on APP fraud and to inform FCA supervisory work.
The FCA shares concerns with the Payment Systems Regulator (PSR) and the industry that APP fraud is a growing problem. This consultation published today builds on the work of the FCA and PSR to better protect consumers from APP fraud. The FCA and PSR investigated APP fraud and found that PSPs could do more to identify fraudulent incoming payments and prevent accounts from being compromised by fraudsters.
Christopher Woolard, FCA Executive Director of Strategy and Competition, said:
“The FCA takes push payment fraud and the harm it causes to consumers very seriously. Our proposals build on our work in this area, and seek to reduce the harm experienced by victims of push payment fraud where they believe the bank who received the money did not do enough to prevent it. We are proposing to require payment service providers to handle complaints about this in line with our complaint handling rules, and to provide the victims with access to the Financial Ombudsman Service.”
Notes to editors
- CP18/16: Authorised push payment fraud - extending the jurisdiction of the Financial Ombudsman Service[1]
- The PSR is the regulator for the payment systems used in APP fraud. Full information can be found on the PSR’s website[2].
- The FCA is the regulator for PSPs and is responsible for the complaints handling rules.
- In September 2016, Which? made a super-complaint to the PSR and the FCA, setting out concerns about the protection available to victims of APP fraud.
- On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the Prudential Regulation Authority (PRA).
- The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
- Find out more information about the FCA[3].