Banks: Authorised Push Payment Fraud

Baroness Ludford Excerpts

Thursday 11th June 2020 Lords Chamber

Asked by

[Baroness Ludford]

To ask Her Majesty’s Government what plans they have to introduce legislation requiring banks to reimburse their customers who have been subject to Authorised Push Payment fraud.

[Baroness Penn (Con)]

My Lords, it is vital that victims of authorised push payment scams are protected. The voluntary contingent reimbursement model code for APP scams, launched in May 2019, sets standards for the prevention of APP scams and for the reimbursement of victims. The Lending Standards Board will review the operation of the code this year. Meanwhile, the Payment Systems Regulator continues to work with the industry to ensure better outcomes for consumers in the fight against APP fraud.

[Baroness Ludford (LD)]

I thank the Minister for her reply, but the fact is that the PSR believes that, last year, innocent victims lost nearly half a billion pounds to this scam, having been tricked into believing that they were transferring money to a correct account. Only a quarter of that money was reimbursed; some banks reimbursed fewer than one in 20 victims. The voluntary code is not working. Defrauded customers are being betrayed. I am not persuaded by the PSR’s argument that EU payment services law bars a statutory obligation—it was not raised when I asked about this last year. Even if it does, this is one area where the Government’s determination to diverge from EU law in future could have a silver lining.

[Baroness Penn]

The noble Baroness is right that the Lending Standards Board has looked at reimbursements and found that, under the voluntary code, they have not been as high as expected. It has issued individual reports to each firm, with actions that they should take to improve matters. The industry continues to work on a longer-term solution and, where voluntary solutions are not possible, there is scope for further regulatory action.