PSR review Payment Systems Operators’ role in tackling scams

A draft Terms of Reference has recently been published by the Payments Systems Regulator (PSR). It sets out its reviewing method regarding whether the CHAPS and Faster Payments Scheme (FPS) operators should play an expanded role in helping them reduce consumer harm from scams.

The publication comes after consumer group Which? submitted a super-complaint, which caused concern around consumer protection to grow. Push payment or APP scams are growing in frequency, as unsuspecting individuals are tricked into transferring funds to a fraudster.

Just one element of the committed, industry-wide effort to challenge APP scams, the recent announcement sheds additional light on the PSR-specific work.

Currently, feedback is being sought on the draft terms, with responses required by the 21 March 2017.

Commenting on the proposed terms was Hannah Nixon. The Managing Director of the PSR highlighted the importance of consumer protection and the need for action to be taken in relation to each stage of the payment process.

‘Late last year we found that authorised push payment fraud was a significant problem and so we set out a package of work to help tackle these scams.

‘Our proposed Terms of Reference show how we plan to build a clearer picture of the role payment system operators might play in better protecting consumers.

‘All along the payments process action needs to be taken to bolster the level of consumer protection. Detection and prevention is a vital part of combatting fraud and the payment system operators could play an important role in achieving this.

‘From banks and building societies to payment system operators, businesses and customers themselves, everyone has a part to play if we are to be successful.’

Work under the suggested terms would look at the prevention and response approaches taken in other countries, establishing whether lessons could be learned from other systems as well as in relation to different types of payment disputes.

On a more specific level, the PSR has two main objectives in the project:

  • Consideration of whether payment system operators playing a greater role in prevention and response of scams is both proportionate and effective. This could relate to the form of their actions or any specific guidelines they might require service providers to adhere to.
  • Should the PSR decide that the measures are appropriate, it will establish whether to implement them through regulatory action or through other avenues. Should it require a regulatory approach, the Regulator will develop additional proposals for a consultation.

In the second half of 2017, the PSR plans to report on its findings as well as providing an update of wider progress made by other involved parties.

The draft terms of reference can be accessed on the PSR website, here.

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