Pay UK is rejecting calls by seven banks for a Faster Payments transaction fee to fund reimbursement of APP victims.

The failure to agree a consensus follows an industry-wide consultation.

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Pay UK received 41 responses to its call for input from a range of different types of Payment Service Providers (PSPs).

The responses are split in terms of support for the rule change. 12 respondents are favour of the proposal with 24 opposed and five stating no firm view. Only a third of PSPs are willing to pay the fee.

Opponents say that the proposed rule change may result in inappropriate cross-subsidies. Moreover, they may impact on incentives to reduce fraud and cut fraud costs.
The industry has implemented a Voluntary Code which agrees to refund all customers who fall for APP scams. That is, provided they did everything expected from under the Code.

APP victims: political implications

To fund this, compensation signatories of the Code established a “no blame” fund. This provides reimbursements from implementation until a new long-term funding arrangement is in place.

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The bank sector’s failure to agree a way forward will have political implications. In particular, the Treasury Select Committee is likely to be vocal.

Specifically, the TSC calls for the code to be compulsory and applied retrospectively. MPs also called for a 24-hour delay on a subset of Faster Payments transactions. This would give consumers the chance to consider if they are being defrauded.

Pay UK is calling on industry and regulators to find a solution that gives customers peace of mind. It adds that the solution must meet the needs of different types of payment providers.

UK Finance CEO Stephen Jones says: “We urge any future government to work together with the Payment Systems Regulator to put news laws in place quickly that ensure victims are protected and reimbursed.”