5+ Obligations for VOP Service Providers
All PSPs registered under the VOP scheme must follow the set of rules and guidelines laid out in the VOP Scheme Rulebook by the European Payment Council.
Navigating the Landscape of APP Fraud Prevention: Unpacking the June 2023 Policy
The impending reimbursement requirement for Authorised Push Payment (APP) scams, outlined in the June 2023 Policy Paper by PSR, heralds transformative changes in the financial sector. This breakdown scrutinises the policy’s intricacies, encompassing the scope, limits, exceptions, and critical enhancements to the reimbursement framework. Targeting UK Faster Payments system participants, including high-street banks and payment firms, the policy introduces the novel concept where receiving PSPs are mandated to share 50% of the reimbursement burden, bolstered by a defined timeline and ultimate backstop. A pragmatic extension of the reimbursement period to five business days acknowledges operational complexities.
Transforming Reimbursement Policies for Authorised Push Payment Scams: Current Landscape and Future Strategies
The landscape of reimbursement policies for authorised push payment (APP) scams is undergoing a transformative shift following recent legislative changes in the UK. The Financial Services and Markets Bill, granted Royal Assent in June 2023, empowers the Payment Systems Regulator (PSR) to implement an innovative 50:50 cost-sharing model between banks involved in sending and receiving funds for APP scams. This article reviews the current Contingent Reimbursement Model (CRM) Code, outlines upcoming changes, and provides strategic guidance for banks preparing for this shift.
Navigating the Evolving Landscape : The Data Protection and Digital Information Bill 2023-24
The Data Protection and Digital Information Bill 2023-24 represents a transformative shift in the evolving legislative landscape governing data protection. Introduced in the House of Commons, the bill aims to create a comprehensive and adaptive regulatory framework for the digital era. It builds on the 2022-23 session’s Data Protection and Digital Information (No. 2) Bill, receiving Royal Assent in June 2023. As organisations prepare for the paradigm shift, proactive strategies and compliance measures become crucial. The bill signifies a forward-looking approach, fostering transparency, protecting individual rights, and fortifying digital landscapes for a resilient and secure future.
Unravelling SD20 : Insights for Faster Payments
Specific Direction 20 (SD20), introduced by the Payment Systems Regulator (PSR) in December 2023, outlines a reimbursement mandate for victims of Authorised Push Payment (APP) scams in the Faster Payments Scheme. This directive, effective from October 7, 2024, necessitates full reimbursement from all Payment Service Providers (PSPs). While SD20 aligns with the broader goal of combating financial fraud, challenges arise, particularly for Electronic Money Institutions (EMIs) and smaller PSPs. Proactive risk mitigation, robust fraud prevention measures, and strategic planning are imperative for industry players to navigate the regulatory landscape, fortify resilience, and ensure compliance with SD20.
Unveiling Confirmation of Payee: A Step-by-Step Guide to Setting Up Confirmation of Payee for your Financial Institution
This guide provides a strategic roadmap for financial institutions aiming to enhance payment security through Confirmation of Payee (CoP) implementation. Highlighting its pivotal role in combatting APP fraud, the guide outlines key steps: building a business case, engaging crucial bank teams, and deciding on a build versus buy strategy. It advocates an API-first approach for seamless integration, emphasises data integrity through cleansing, and underscores the importance of clear communication channels and proactive customer education. It offers a concise, strategic approach to fortify financial transactions, ensuring heightened security and upholding the industry’s trustworthiness.
Strategic Imperatives for Banks in Tackling the Dual Challenge of APP Fraud: Sending and Receiving Fraudulent Payments
Payment Systems Regulator (PSR) initiated transformative measures to address the surging threat of Authorised Push Payment (APP) fraud within the UK’s faster payments system. This article delves into the complex landscape banks face in sending and receiving fraudulent payments. With APP fraud causing over £480 million in losses to 200,000 consumers in 2022, the PSR’s forthcoming rules, effective October 2024, introduce a paradigm shift. The PSR’s three-pronged approach focuses on consistent reimbursement, enhanced victim protection, and incentivising proactive fraud prevention. Banks grapple with operational challenges, emphasising the need for collaboration, enhanced capabilities, and adaptability in navigating the evolving regulatory landscape.
Exciting Transparency Initiative – PSR APP fraud performance data!
For the first time, the Payment Systems Regulator (PSR) unveils a ground-breaking transparency initiative, sharing comprehensive data on Authorised Push Payment (APP) fraud. This data allows users to assess their banks’ performance in reimbursing victims and handling fraudulent transactions, empowering informed decisions. The report recognises leaders like TSB and Nationwide, praising their commitment to customer protection. It delves into various metrics, revealing trends, challenges, and priorities across different financial institutions, shedding light on the complex landscape of APP fraud in the UK.
FCA’s findings from review with a focus on APP Fraud
The Financial Conduct Authority (FCA) released a report recently titled, “Anti-fraud controls and complaint handling in firms,” with particular attention paid to Authorised Push Payment (APP) fraud. This study included current account providers, challenger banks and payment firms among its participants. While the FCA identified effective control frameworks and best practices, it also identified various weaknesses in fraud risk management and customer treatment areas. We will focus on two of these critical areas identified by the FCA-fraud systems and controls and customer awareness campaigns–and provide solutions that would allow mid-tier banks to address these concerns effectively. Fraud Systems and Controls One of the key findings from the FCA review relates to the need for improved anti-fraud control frameworks and strategies. Mid-tier banks already utilise transaction monitoring systems; however, due to an increasing threat from Advanced Payer Identity fraudsters, they should also implement Confirmation of Payee solutions as one solution against such fraudsters. These solutions play a critical role in safeguarding payment journeys by verifying recipient details and using behavioural biometrics to detect signs of social engineering in real-time, which has proven very successful at combating fraud prevention and detection efforts. Implementing such technologies can significantly bolster fraud prevention and detection efforts. Customer Awareness Campaigns Customer awareness campaigns are an effective way to protect customers against scams. Mid-tier banks should create customised awareness materials tailored specifically for specific customer personas to maximise the effectiveness of such efforts and make an impactful statement about the potential danger scammers pose. Personalised messaging ensures that it resonates with each customer segment, increasing the chance of the patterns of scams being recognised and preventing them. The establishment of a dedicated phone line for customers to report suspicious activities can foster customer trust and security. Effective Customer Complaints Management Improving the way mid-tier banks address their customer complaints in situations of fraud investigations is a prerogative. This may include evaluating language used during communication, timing of notifications, and consistency in decision-making rationales. To achieve this, a team must have adequately trained individuals with appropriate expertise to handle complaints efficiently. Adequate staffing and operational efficiency can only be attained with effective Management Information Systems (MI). Governance, Oversight, and Management Information (MI) Enhancing data collection related to fraud is a vital step for mid-tier banks. This includes identifying the types of fraud and sub-categories specific to APP fraud. The MI system should not only focus on regulatory requirements but also incorporate customer-centric measures. Mid-tier banks can leverage customer-specific data to enhance their anti-fraud systems and controls for enhanced prevention and mitigation of fraud. By taking this proactive approach mid-tier banks have more to gain from fraud management solutions. What’s Next? This blog serves as a call to action for both mid-tier and small banks to proactively seek professional assistance on any concerns regarding the implementation of the Payment System Reform Regulations in 2024. If your bank is preparing to expand Confirmation of Payee (CoP), a continuous review of antifraud systems and controls is necessary for meeting the PSR’s reimbursement requirements is important. What Would Lead to Success? Viewing anti-fraud controls and systems as mere compliance exercises is not sufficient, particularly for mid-tier banks. Instead, starting early and taking an active leadership role to establish robust anti-fraud systems and controls is the best way to safeguard customers and the institution in an ever-evolving threat landscape. Success here requires ongoing improvement and vigilance rather than simply ticking regulatory boxes. TechnoXander’s Confirmation of Payee Solutions is dedicated to creating cutting-edge technology that enhances anti-fraud systems and controls. As financial fraud continues to evolve, so must our responses. In collaboration with regulators and financial institutions, we are working together towards shaping a safer financial landscape for everyone, protecting against its rising tide of threats.
Navigating the Changing Tides: The Evolution of PSR Regulations in 2023
In 2023, the Payment System Regulator (PSR) made strides against rising Authorised Push Payment (APP) fraud. The legislation mandated 100% reimbursement, shared between banks. The UK government’s three-pillar strategy aimed at pursuing fraudsters, blocking fraud, and empowering individuals. June saw additions to Faster Payment rules and the introduction of Confirmation of Payer. Seeking industry input in August on reimbursement limits showcased PSR’s commitment to collaboration. Adjusting timelines to October 2024 reflected responsiveness to industry feedback, emphasising a proactive and adaptable regulatory landscape, and shaping a more secure financial future.
