PSR draft guidance on APP reimbursement

Draft guidance on APP scams and civil disputes

On 18 July 2024, the Payment Systems Regulator (the PSR) published its Draft Guidance on “Authorised push payment scams reimbursement requirement – Supporting the identification of APP scams and civil disputes” (the Draft Guidance). In summary:

• The Draft Guidance is intended to support Payment Service Providers (PSPs) in their assessment of whether an authorised push payment (APP) scam is not reimbursable under the reimbursement requirement because it is a private civil dispute. The PSR says it is intended to be guidance only as civil disputes and APP scams could look very similar and so each case needs to be considered on its merits.
• The PSR says PSPs are to take a proportionate approach to assessing a claim and has reminded PSPs of the core principles (originally set out in its June policy statement):
  • All PSPs should consider each claim and payment on its own merits.
  • All PSPs should consider the circumstances leading up to the disputed payment(s).
  • The sending PSP should consider all available relevant information when assessing a claim.
  • The sending PSP should make best efforts to gather relevant information in a timely manner.
  • The receiving PSP(s) should provide accurate and complete information where requested or material about the receiving account and the account holder.
• When seeking to distinguish between a civil dispute and an APP scam, the PSP should consider (amongst other things) – (1) whether the recipient is not who the consumer intended to pay, (2) whether the payment is not for the purpose the consumer intended and (3) if there is any evidence the consumer has been deceived or manipulated. Where a consumer has paid an unintended recipient and there is no evidence to suggest that the payment was accidently misdirected, and there is evidence of an intent to defraud, it is more than likely to indicate an APP scam has taken place.
• The PSR has set out some high level factors for PSPs to take into account when trying to determine if a claim relates to a civil dispute or a reimbursable claim as follows:

What does this mean for you?

• Ahead of 7 October 2024, PSPs will be considering and developing a treatment plan or, assessment criteria to assess whether a payment will be categorised as a ‘reimbursable FPS APP scam payment’. This guidance will help PSPs to formulate a guide for its colleagues on whether a payment should be considered a civil dispute or APP scam (and then whether it is a reimbursable FPS APP scam payment). Any treatment strategies should also highlight the stop the clock provisions to ensure PSPs are using the tools available to them to achieve the correct outcome for the consumer.
• The PSR identifies in the Draft Guidance that certain APP scam claims involve a complex set of factors that need to be carefully and proportionately balanced. It is also recognised in the PSR’s latest policy statement (PS24/3 Faster Payments APP scams reimbursement requirement: compliance and monitoring (psr.org.uk)) that there is a need to ensure complex cases can be identified using clear criteria and that appropriate steps are taken to manage them (as some complex claims may require more than 35 business days to assess). The PSR and Pay.UK will be working on the identification and management of complex claims over the coming months.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2024. Specific advice should be sought for specific cases. For more information see our terms & conditions.