Financial Conduct Authority brings in new push payment complaints rules

From 31 January 2019 victims of an APP fraud who have been conned into authorising a transfer of money from their bank account will be able to make a complaint against the receiving bank, as well as their own bank. Victims will also be able to refer unresolved complaints to the Financial Ombudsman Service (FOS).

Up until now, victims have only been able to complain about the conduct of their own bank, with that entity handling any complaints according to the rules in the FCA Handbook. From now on, banks and other payment service providers (PSPs) receiving a fraudulent APP transfer will have to handle complaints in the same way.

The FOS is also proposing to mirror the new requirements in its voluntary jurisdiction, and the policy statement (25 page / 448KB PDF) setting out the rules was issued jointly by both the FCA and FOS.

The rule change follows a consultation earlier this year which found that respondents were broadly supportive of the proposals.

The final rules clarify exactly what is meant by APP fraud, in order to make sure it does not capture credit card or direct debit payments.

Respondents were concerned that complainants could have to wait several weeks for their bank to establish that the receiving PSP was involved in an alleged fraud. Some suggested that a sending and receiving PSP could delay the outcome by passing a case between them, resulting in a negative experience for the victim.

Other respondents were concerned about consumers being able to bring a complaint to a party with whom they have no contractual relationship.

The FCA said it expected that consumers would still mostly bring a complaint to the sending bank, and that this PSP will involve the receiving PSP where necessary. If a sending PSP receives a complaint, they will have to decide if it can respond or if the complaint should be forwarded to the receiving PSP. Any banks receiving forwarded complaints will have to handle them as though they had been made directly.

Civil recovery expert Rachelle Issa of Pinsent Masons, the law firm behind Out-Law.com, said: "The FCA’s changes give consumers and smaller businesses who fall victim to APP frauds a wider range of recovery options and come at the end of a year in which there has been dramatic progress in tackling the growing problem of APP frauds."

"However, the changing regulatory landscape is not often aimed at larger businesses who also fall victim to APP frauds and such businesses should not overlook the various civil recovery options available to them," she said.

In August the FOS said it would be looking for “clear evidence” that banks have properly investigated complaints in cases of suspected APP fraud. Meanwhile the Payment Systems Regulator is working on an industry code to better protect victims, and payments architecture body Pay.UK is developing rules and standards designed to confirm a payees’ identity.

UK Finance data on APP fraud show there were 43,875 cases of APP fraud and total losses of £236 million in 2017.