UK plans to reimburse scam victims 'fundamentally flawed' - lawmakers

<html xmlns=""><head><title>UK plans to reimburse scam victims 'fundamentally flawed' - lawmakers</title></head><body>

By Iain Withers

LONDON, Feb 6 (Reuters) -Proposals to reimburse hundreds of millions of pounds to scam victims in Britain are "fundamentally flawed" and are taking too long to come into force, lawmakers said in a report published on Monday.

Banks will have to refund within 48 hours customers tricked into sending money to fraudsters under plans drawn up by watchdog the Payment Systems Regulator (PSR) unveiled in September.

So-called "authorised push payment" scams have become Britain's largest type of payment fraud and cost customers 583 million pounds ($715 million) in 2021.

Lawmakers on Britain's powerful Treasury Select Committee criticised the plans and said mandatory reimbursements should begin this year at the latest, and not as late as 2024.

The PSR's proposal for Pay.UK - which operates Britain's faster payments system - to handle reimbursements would lead to "inherent conflict of interest" as it is guaranteed by the financial services industry, the committee added.

"Putting an industry body in charge of reimbursing scam victims is like asking a fox to guard the henhouse," said Harriett Baldwin, chair of the Treasury committee.

The PSR said it would consider all feedback before publishing its final position in May this year, adding it regulated payment system operators including Pay.UK.

A Pay.UK spokesperson said its bank guarantors did not influence its decision-making. "Our governance model is approved and supervised by the Bank of England and the PSR to ensure our independence," the spokesperson added.

Some of the banks that would be affected by the new rule include HSBC HSBA.L, NatWest NWG.L, Lloyds LLOY.L, Barclays BARC.L, Santander UK SAN.MC and Virgin Money VMUK.L.

Lenders have long said they should not pick up the full bill for online fraud and that tech platforms exploited by criminals to lure victims should also pay up.

Bank lobby group UK Finance said a reimbursement model was necessary, but added "we need greater cross-sector action, including shared accountability for fraud prevention and reduction, to help tackle the threat at source."

($1 = 0.8159 pounds)

Reporting by Iain Withers, Editing by Mark Potter


Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.