FCA to update rule book to accommodate APP fraud

FCA to update rule book to accommodate APP fraud

The UK's Financial Conduct Authority is proposing to update its complaint handling rules to help victims of authorised push payment (APP) scams.

APP fraud - when businesses or individuals are conned into sending money to a fraudulent account to pay for goods or services - was brought to the fore by consumer group Which? in a super-complaint to the regulator expressing concern that consumers had no legal right to claim money back from their banks in such circumstances.

UK Finance data on APP fraud show there were 43,875 cases of APP fraud and total losses of £236 million in 2017.

An initial review of the way banks handle APP scams conducted by the FCA found banks’ procedures were inconsistent, their existing fraud detection systems could not easily detect APP fraud, and they didn’t collect enough data.

The FCA is now consulting on requirements for firms to handle APP complaints in line with complaints handling rules in the FCA Handbook and to provide the victims with access to the Financial Ombudsman Service.

The watchdog also plans to consult on requirement for banks to publish data on the complaints about alleged APP fraud that they receive to help further refine guidance

Christopher Woolard, FCA executive director of strategy and competition, says: “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.”

While the FCA updates its rule book, the UK's Payment Systems regulator has set up a steering group composed of representatives from banks and consumer groups to develop an industry code for reimbursing victims of APP scams.

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