TechnoXander 155 Evolution of PSR Regulations

In 2023, the Payment System Regulator (PSR) took significant strides to counter the rising tide of Authorised Push Payment (APP) fraud. From ground-breaking legislation mandating 100% reimbursement to the UK government’s three-pillar strategy, this blog explores the dynamic shifts in PSR regulations. We’ll dissect key developments, including the incorporation of Confirmation of Payer and industry consultations on reimbursement limits, highlighting a regulatory landscape that’s both proactive and responsive. Join us as we unravel the trends shaping a more secure and resilient banking future amidst the evolving challenges of APP scams.

April 2023: Legislation Mandates 100% Reimbursement

In a significant stride toward consumer protection, April 2023 witnessed a landmark development in Payment System Regulator (PSR) regulations. The legislation mandated a 100% reimbursement of consumers’ losses resulting from Authorised Push Payment (APP) fraud, with shared liability between sending and receiving banks. This bold move signalled a shift in the regulatory landscape, placing greater responsibility on payment service providers (PSPs) to fortify their defences against fraudulent activities.

May 2023: A Three-Pillar Strategy Against Financial Scams

The commitment to combat financial scams took a strategic turn in May 2023 when the UK government, spearheaded by Home Secretary Suella Braverman, introduced a comprehensive three-pillar strategy. Focused on pursuing fraudsters, blocking fraud, and empowering people, this approach sought to address the issue at its core while empowering individuals with the tools and knowledge to safeguard their financial well-being.

June 2023: Faster Payment Rules and Confirmation of Payer

Building on the momentum, the PSR proposed crucial additions to its regulatory framework in June 2023. This included the incorporation of mandatory reimbursement into Faster Payment rules, emphasising a proactive stance against APP fraud. The introduction of Confirmation of Payer, drawing inspiration from the Financial Services and Markets Act (FSMA), aimed to further strengthen the authentication processes, adding an extra layer of security to financial transactions.

August 2023: Seeking Industry Input on APP Fraud Reimbursement Limits

Recognising the dynamic nature of the financial landscape, the PSR proactively sought industry perspectives in August 2023. By opening discussions on APP fraud reimbursement limits and a consumer standard of caution, the regulator aimed to foster collaboration between stakeholders. Topics ranged from specific warnings and timely reporting to information exchange, gross negligence clauses, excess, and maximum reimbursement levels. This transparent dialogue showcased the PSR’s commitment to creating regulations that resonate with the needs and challenges of the industry.

September 2023: Adjusting Timelines in Response to Industry Feedback

In a demonstration of responsiveness to industry feedback, the PSR initially proposed an April 2024 start date for the reimbursement requirement. However, after considering valuable insights from stakeholders, they adjusted the timeline to October 2024. This adjustment reflects the PSR’s commitment to creating a balanced regulatory environment, ensuring that industry players have adequate time to implement necessary measures while maintaining the urgency to address the pressing issue of APP fraud.

October 2023: Confirmation of Payee Implementation Deadline

October 2024 marks the deadline for the implementation of Confirmation of Payee (CoP) as announced by the Payment Systems Regulator (PSR) on October 11. Group 2 and all other Payment Service Providers (PSPs) are required to have CoP in place by October 31, 2024. This entails the capability to both respond to CoP requests and send CoP requests to other banks for beneficiary detail verification prior to initiating a payment.

A Proactive and Adaptable Regulatory Landscape

As we navigate the intricate web of PSR regulations in 2023, it is evident that the regulatory landscape is not static but rather evolving to address emerging challenges. The three-pillar strategy, incorporation of Confirmation of Payer, and the ongoing dialogue on reimbursement limits underscore a proactive approach. With an adjusted timeline reflecting industry collaboration, the PSR sets the stage for a regulatory environment that is both robust and adaptable, marking a pivotal chapter in the ongoing battle against APP scams. As the financial industry prepares for the changes ahead, one thing remains clear—the evolution of PSR regulations is not just a response to the current landscape; it is a forward-looking commitment to shaping a more secure and resilient financial future.

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