What’s this about?

On 24 May 2024, the Payment Systems Regulator (PSR) sent a letter setting out the key areas of focus for firms ahead of the mandatory APP scams reimbursement requirement (the Letter). With the reimbursement requirement coming into effect on 7 October 2024, the Letter sets out three key areas for firms to focus their implementation activities on.

Our Head of Economic Crime Compliance, Ben Cooper says...

“With just over four months until mandatory reimbursement comes into force, it is clear that whilst many firms are already taking positive steps, there is plenty of work still to be done. The PSR sets out that firms should focus on fully understanding the new requirements, how to manage claims and report data and consumer awareness. The PSR also points to the fact that prevention is better than a cure and reminds firms of the importance of reviewing their fraud systems and controls to ensure they are working effectively to prevent fraud.”

The points not to miss...

In December 2023, the PSR published its final details on the mandatory reimbursement policy for APP scams relating to Faster Payments. The requirements will apply to all Payment Service Providers (PSPs) that send or receive payments over the Faster Payments System. On 8 May 2024, the PSR also announced a new proposed specific direction to all PSPs participating in CHAPS to reimburse customers who have been victims of APP fraud. The reimbursement requirements will come into effect on 7 October 2024.

The PSR recognises that this is a significant change in the industry and that impacted PSPs are already taking steps to improve end-to-end fraud prevention. The PSR however acknowledges that it is an “ambitious approach” and so has looked to set out three key areas for focus for PSPs to ensure they are ready for implementation in October:

The PSR asks all PSPs to consider whether the requirements will apply to them as either a sending or receiving PSP. The PSR says it remains committed to supporting the industry with ensuring consistent understanding and will continue to hold sessions with Pay.UK, the Bank of England and the Financial Ombudsman Service (FOS). It is recognised that FOS play an important role in the interpretation of the requirements when considering customer complaints.

Pay.UK has implemented a reimbursement claim management system to allow PSPs to communicate with each other, manage APP scam claims and report data to Pay.UK. The PSR reminds firms that, if they have not already done so, they will need to register with Pay.UK so it can create a directory of PSPs’ contact details. The PSR also encourages PSPs to attend Pay.UK’s engagement sessions where further information is shared to help firms get ready for October.

The PSR says firms need to ensure that communications are updated and fit for purpose to ensure consumers are clearly informed of the protections available under the new reimbursement requirements. The PSR says it expects proactive steps to be taken and is consulting on a proposed change to specific direction 20 to require PSPs to notify customers of the reimbursement requirement. The PSR wants fraud reporting processes to be as simple and accessible as possible – taking into account the needs of vulnerable customers.

The PSR does recognise that reimbursement is only one part and says it is working with the FCA to help try and put in place incentives to prevent as much fraud as possible happening in the first place. The PSR says the impact of the reimbursement requirements can be reduced by putting in place better controls (e.g. when onboarding customers, transaction monitoring, detection of suspicious activity and reporting). To support the fraud prevention efforts HM Treasury is legislating to introduce greater flexibility around payment delays.

The PSR also says that it will continue to publish annual data on APP scams and will look to extend this data into fraud origination. Using existing data (and further data requested ahead of the implementation date), the PSR is also looking at the impact of high value claims.


  • In its 2024 annual fraud report, UK Finance called out its concerns that the reimbursement requirements are great for victim protection but it has concerns around the unintended consequences including customer complacency and increased first party fraud (see our update here). In the Letter, the PSR does not directly address this but does acknowledge the challenges to firms generally and so will continue to monitor this.
  • The FCA has published key findings from reviews of firms’ systems and controls in relation to mitigating APP fraud and financial crime more broadly. Both reports provide examples of good and bad practice of fraud prevention. There is an ongoing need to consider systems and controls to ensure they are keeping up with the increasing sophistication of criminals and technological advances.
  • Careful communications need to be provided to ensure that consumers are informed of the increased protections but that it is also clear what is expected of consumers. It is helpful that the PSR continues to recognise the importance of ensuring the FOS is as up to speed and aligned with the industry as possible.
  • From a processes perspective, another focus will be ensuring the right balance is struck between meeting the PSR’s requirements that fraud reporting is as simple and accessible as possible whilst also building in the right level of review, information gathering and investigation to protect against first party fraud and other risks.

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

Date published

30 May 2024

Want to discuss? Please contact:


View all