The Payment Systems Regulator (PSR) has announced the start of what it described as "a concerted and coordinated industry-wide effort to tackle payment scams", following a super complaint from consumer watchdog Which?.

The regulator has published its response to a super-complaint about protection for people making authorised 'push' payments (APP). It outlines an approach that will see regulators and industry commit to working together to better protect consumers from scams.

Which? lodged the super-complaint in September 2016, raising concerns there is not enough protection for people who are tricked into transferring money to a fraudster via an authorised push payment – when the consumer instructs their bank to send money. The PSR is warning that APP scams are a growing concern, and more needs to be done to address the problem.

Data available on the scale and type of APP scams is poor-quality, the regulator announced, adding that the ways in which banks currently work together in responding to reports of scams needs to be better. The PSR also found evidence to suggest some banks could do more to identify potentially fraudulent incoming payments, and to prevent accounts falling under the influence of scammers.

Hannah Nixon, managing director of the PSR, said: "In a short space of time we have built a clearer picture of the problems we are facing, and it is evident that this type of scam is a growing problem that needs to be tackled.

"Tens of thousands of people have, combined, lost hundreds of millions of pounds to these scams, but the data we have seen so far is incomplete. We need a concerted and coordinated industry-wide approach to better protect consumers, and we need it to start today."

What the PSR has agreed:

  • Industry, liaising with the Information Commissioner's Office as appropriate, to develop a common understanding of what information can be shared under existing law and the key legal barriers to sharing further relevant information (for example, information that would help victims recover their money).
  • Industry to develop, collect and publish robust scam statistics, to address the lack of clear data on the scale and scope of the problem, and to enable monitoring of the issue over time.
  • Industry to develop a common approach or best practice standards, that both the victim's bank and the bank which receives the money should follow when responding to reports of scams. We would expect this to cover issues such as the availability of fraud specialists and processes for agreeing indemnity agreements between banks.
  • The PSR will monitor this work on an ongoing basis, and commit to reviewing industry progress in the second half of 2017, while conducting further work to consider the potential for the operators of the payment systems, in particular Faster Payments Service and CHAPS, to play an expanded role in helping to minimise the consumer harm caused by scams.

The PSR concluded there was not sufficient evidence to justify a change in liability, for example making banks liable for reimbursing victims of APP scams, and it is aware of the possible unintended consequences of doing so. However, it was noted that as the work progresses and additional evidence comes to light, it will consider whether it is appropriate to propose changes to the obligations or incentives that banks have for these types of scams.

Nixon continued: "There is no silver bullet, but more can be done to prevent these scams in the first instance, and to respond faster when it does happen, in order to give consumers more support and help in recovering their money.

"Across the banking industry there is already a range of work underway that has the potential to help combat some of the issues we are seeing, but more needs to be done."

She added: "As technology improves, we need to find ways of making it harder for fraudsters to commit these scams. We are committed to seeing the banking industry work together to take a firm and pro-active stance in protecting their customers from this type of fraud."