UK Fraud Reimbursement Platform Sees Slow Adoption by Financial Institutions

Banks and payment companies have been slow to adopt a new platform in the U.K. that is meant to streamline the reimbursement of consumers who have fallen victim to online fraud.

Since its launch last October, the platform run by Pay.UK for the Payment Systems Regulator (PSR) has onboarded 558 companies — short of its goal of 1,500 firms — and has processed 10 claims, Bloomberg reported Tuesday (Feb. 25).

The reimbursement claims management system is designed to help firms more easily share data while complying with Britain’s new rules that require the institutions sending and receiving fraudulent payments involved in authorized push payment fraud to split the cost of refunding the consumer, according to the report.

The PSR delayed plans to make the platform mandatory, so most claims are still being processed on an older system operated by industry body UK Finance, the report said.

The regulator told Bloomberg, per the report, that consumers are benefiting from the new reimbursement rules even though most firms are handling claims with the old system.

The reimbursement rules launched in October require U.K. banks and payment firms to reimburse the victims of authorized push payment (APP) fraud up to £85,000 ($111,000), PYMNTS reported at the time.

The PSR had called for the reimbursement rules following a surge in APP fraud that cost British residents $433 million in 2023.

The regulator initially planned an upper limit for reimbursements at £415,000 ($544,000) but was lobbied by industry groups like the Payments Association to hold off on imposing the new measure for at least a year.

The reimbursement rules also faced controversy over its allowing banks and payment companies to charge a fee of £100 when settling fraud claims. While many industry figures said the added levy would ensure consumers remain vigilant against APP fraud, consumer groups argued that because 32% of APP fraud cases involve £100 or less, many consumers would lose money in being reimbursed.

It was reported in June that the then-managing director of the PSR stepped down from that position amid rising anger in the financial industry over the new fraud refund regulations.