Authorised Push Payment Fraud

Victoria Atkins Excerpts

Wednesday 1st March 2023 Westminster Hall

[The Financial Secretary to the Treasury (Victoria Atkins)]

It is a pleasure to serve under your chairmanship, Mr Dowd. I commend the hon. Member for East Renfrewshire (Kirsten Oswald) for securing this debate, which addresses an issue that she clearly cares about deeply. I know from my own constituency and from conversations with colleagues across the House that it is, sadly, one that we see across the country, which is why the Government also care deeply about it. It is a growing issue and demands urgent intervention.

As the hon. Lady set out articulately, authorised push payment scams are becoming increasingly sophisticated and often target the most vulnerable in our society. Because they are so sophisticated, they are also able to target professionals, businesses and so on—people who would otherwise consider themselves to be alive to these sorts of risks. It is a very clever form of fraud.

Under the European regulatory system that we have inherited, there is no statutory or regulatory requirement for banks to reimburse the victims of these scams. Although the creation of a voluntary reimbursement code has improved matters, reimbursement for victims has, as the hon. Lady set out, been inconsistent across banks and for victims, and only about half the stolen money is reimbursed. As a result, many victims are left facing significant losses; in the worst cases, they can lose their life savings. From the hon. Lady’s descriptions, we know the impacts that that can have on people and businesses. We are acutely aware of the impact of this type of fraud, so we are determined to help victims and to crack down on these scams and the impact that these fraudsters have on people and businesses.

Front and centre of those efforts is our action on victim reimbursement. As part of the Financial Services and Markets Bill, we are introducing world-leading legislation to protect people as a matter of urgency. Once passed, the Bill will remove legal barriers in retained EU law that currently prevent regulatory action on reimbursement by the Payment Systems Regulator. That will enable the regulator to mandate reimbursement for any payment system under its supervision. However, the legislation goes even further: it will also place a specific duty on the regulator to implement a reimbursement mandate for the faster payments system within six months. I hope that the hon. Lady and other hon. Members will be assured that there will be swift regulatory action once the Bill receives Royal Assent.

This issue does not just require timely action; it also demands effective action. We are confident that the regulator has the appropriate objectives, expertise and powers to design the details of mandatory reimbursement in a way that ensures strong and consistent protections for victims. In its recent consultation on the matter, it stated its intention to require firms to fully reimburse victims of all APP fraud occurring through faster payments, with very limited exceptions. That would ensure that victims are reimbursed in the vast majority of cases and at far higher rates than under the existing voluntary reimbursement codes.

[Kirsten Oswald]

I hear what the Minister says. What does she think about the people I described in my contribution, who will not be covered by the measures she outlined?

[Victoria Atkins]

I was going to attempt to answer the question posed by the hon. Lady later, but I will answer it now. Regarding current victims, the legislation is not retrospective—she will know that it is very rare for this place to pass retrospective legislation—but we expect banks to honour past voluntary commitments. That may well be something that the Economic Secretary to the Treasury, who has primary responsibility for this area, has put his mind to. I will ask him to write to her with his thoughts on it.

Given that the hon. Lady has intervened on me, I will respond to the interesting points she raised about social media and tech companies. I will do the same as on the previous point, and ask the Economic Secretary to the Treasury to write to her. From my own portfolio, I know some of the challenges with the use of social media when it comes, for example, to repayment agents who are not behaving as they should. As the hon. Lady says, the ability of fraudsters to present themselves as legitimate, by stealing people’s business logos or details, is highly sophisticated. It requires a joined-up reaction from across Government, law enforcement and so on.

That brings me to what we are doing across Government. Although this is an insidious form of fraud, it is not the only one our constituents face. We will therefore shortly publish a new, broad-based fraud strategy, which will detail how we will prevent fraud, so that people do not lose their life savings and money in the way the hon. Lady set out and we can crack down on these gangs.

In the meantime, the Treasury has worked diligently with the Financial Conduct Authority and the Payment Systems Regulator on the roll-out of fraud prevention measures such as confirmation of payee, which the hon. Lady referred to, which can help and has been designed to stop some forms of APP fraud and accidentally misdirected payments. I know that the hon. Lady and other hon. Members will welcome the regulator’s action to mandate that service for the vast majority of faster payments transactions, and I highlight its intention to achieve near-universal coverage in the near future.

The Treasury continues to assess industry proposals for legislation to enable further delay to high-risk payments. The hon. Lady asked me about internal banking processes, and that is one way that we have looked to address that form of fraud.

The regulator has consulted on further measures to prevent payment fraud, including enhanced information sharing between payment providers so that scammers can be identified and shut down quickly. That is in addition to mandating confirmation of payee, which I have already described. That will enable payers to check that they are, in fact, sending payments to the right person.

In short, we very much understand why the hon. Member for East Renfrewshire has raised this important issue. We share her determination to tackle it, and look forward to working with law enforcement agencies, banks, the regulators and colleagues across the House to ensure that our constituents are protected from this invidious form of fraud, which I know we all want to see stopped.

Question put and agreed to.