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Moves to make compensation claims easier for those who have been tricked into transferring funds to scammers are unlikely to deter fraudsters from targeting customers of high street banks.
Lawyers broadly welcomed the announcement yesterday that the Payment Systems Regulator (PSR) would consult on the creation of a “contingent reimbursement model”.
The scheme would compensate some victims of authorised push payment (APP) scams, which involve people being tricked into sending money to a fraudster.
Statistics from UK Finance, a banking sector representative group, show that in the first six months of this year more than 19,000 victims were targeted by APP scams involving a total of over £100 million.
Hannah Nixon, the PSR managing director, said “there is no silver bullet for APP scams, and some people will still, unfortunately, lose out. That’s why we’ve continued to look for a solution that could reimburse those who are scammed, and today we begin consulting on an option that we think could work.
“To be successful, the model must be pragmatic. Consumers will need to be vigilant and protect themselves, but equally we expect banks and payment service providers to uphold best practice — and when they don’t there should be reimbursement.”
However, Richard Hayllar, a partner at the national law firm TLT, said any proposed contingent reimbursement model was “likely to see a move of liability towards payment service providers and greater reimbursement of victims of those scams”.
He continued that the success of the proposed scheme would rely on the interpretation of “requisite level of care” for consumers and “best practice standards” for payment service providers.
“Looking forward, the increasing sophistication of banks’ fraud detection systems means that fraudsters will continue to target customers as the weakest link in the transaction chain,” he said.