A total of £236 million – that’s how much victims of authorised push payment (APP) fraud lost to perpetrators in 2017, according to UK Finance. The trade body’s data points to nearly 44,000 cases last year, and now the Financial Conduct Authority (FCA) is proposing changes to complaints handling as part of efforts to address the problem.
It’s a straightforward modus operandi – fraudsters dupe payers into authorising their payment services provider (PSP) to transfer funds to accounts controlled by the perpetrators. Currently APP fraud victims are not able to complain to the recipient PSP, and this is one of the things the FCA wishes to change.
Among the regulator’s proposals is requiring the end PSP – say, the fraudsters’ bank – to handle the complaints. If victims do not get a response or are not pleased with the outcome, the watchdog wants the Financial Ombudsman Service to be the next recourse for eligible complainants.
“The FCA takes push payment fraud and the harm it causes to consumers very seriously,” said executive director of strategy and competition Christopher Woolard. “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.”
According to the regulator, at present the Financial Ombudsman Service cannot consider complaints made against PSPs who have received money transferred as a result of APP fraud as they are outside the ombudsman’s jurisdiction. Therefore the proposal is to extend the scope.
Meanwhile an earlier probe by the FCA and the Payment Systems Regulator found that these recipient firms could do more to identify fraudulent incoming payments and prevent accounts from being compromised.
The consultation will close on September 26, 2018.