FCA And UK Treasury Sound The Alarm On Upcoming Fraud Refund Scheme
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The Financial Conduct Authority (FCA) and the UK Treasury have raised alarms concerning an upcoming scam refund plot that could cause big problems for the financial industry.
The Payment Systems Regulator (PSR)’s new policies, which will be effective on October 7th stated that fintech companies and banks are required to fully compensate those who lost money from authorized push payment (APP) fraud. The institutions are to pay the victims up to £415,000, and the cost would be shared between the companies that sent and received the money.
Payment Systems Regulator (PSR) Set A Deadline Of October For Implementation
There are concerns that the scandal could cause a long-lasting injury to the industry, especially the smaller players. Last year, Britons lost almost £460 million to APP fraud and it has caused regulators to create rules to keep customers safe. However, the fast deadline for putting in place the PSR’s reimbursement policies has raised concerns in the financial industry.
Sources aware of the situation revealed that Chancellor Rachel Reeves and Labour City Minister Tulip Siddiq are both worried about the deadline in October. Siddiq is mostly worried that the deadline might be too short for the rules to be successfully implemented.
The new regulations stated that all companies in the payment circle including about 1,500 payment companies, must follow a strict five-day time limit to pay back.
The requirement has sparked worries that several companies might not keep up in using the claims management system created for the regime. This may force them to consider reporting manually, a move that could make it difficult for companies to communicate with each other. It could also delay the payment to individuals who were scammed.
Pay.UK Aims to Have System Fully Operational by Deadline
The industry is worried that the scheme might be too costly for smaller companies, which could stop the UK’s fintech investment. However, Pay.UK, the group building the system, says it will be ready on time.
The Treasury’s worries and the industry’s warnings show that the scheme could have big problems at the start. As the October 7th deadline nears, the financial sector gets ready for issues with the PSR’s new rules.
Silvija Krupena, Director of the Financial Intelligence Unit at RedCompass Labs, spoke on the need to hear the industry’s concerns. She said the regulator might delay or change the threshold for the new reimbursement scheme. She suggested this shows the new rules may not be strong enough.
Krupena stated that just reimbursing scam victims won’t fix the crime issue. She said the new rules could cause long-term harm to the banking industry. She believes the regulator and government should focus on a broader approach that includes social media and tech companies.
