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.
Enhancing Transparency and Accountability in the Fight Against APP Fraud
APP fraud in the UK is complex with mixed responses and outcomes for victims. However, the industry is getting better at fraud prevention. Regulatory bodies have introduced the 2024 reimbursement requirement and Confirmation of Payee making it more consistent and accountable when dealing with APP fraud.
Confirmation of Payee: All You Need to Know in 2024
Launched in 2020, the Confirmation of Payee was implemented to tackle the increasing numbers of APP Fraud in the landscape of the UK which has now been adopted by Payment Service Providers (PSPs), building societies, and several banks in the UK.
🔒 Protecting Against APP Fraud: The Latest from PSR 🔒
A new update is released by the Payment Systems Regulator (PSR) focused on strengthening protection against Authorised Push Payment (APP) fraud under the Faster Payments system. Interestingly, the new policy includes a reimbursement requirement for significant benefits to consumers and businesses alike.
CoP solves the growing problem of APP fraud for banks in the UK
Authorised Push Payment (APP) fraud has spread like wildfire in the UK. According to UK Finance, APP fraud increased from £208 million in the initial months of 2020 to £355 million in 2021. The trend followed in the second half of 2021, with APP fraud reaching £819 million. This growth in APP scams is staggering and can cause paramount harm to customers. APP scams occur when an individual authorises their respective Payment Service Provider (PSP) to transfer money to an intended payee’s account. In an APP scam, the payer is duped into making a push payment into an account held by a fraudster. What’s more, there were approximately 189,000 reported APP scams in 2021 on personal accounts. It is a surge of 30% from 2020. According to UK Finance, the UK banks reimbursed £207 million from the total £479 million of APP fraud, amounting to 43% of the refund. These scams force customers to suffer emotionally and financially; banks also suffer heavy financial and reputational losses. Fathoming the continuing challenge, the payment processes must be secure; thus, PSPs must take stringent measures to stop APP scams. Banks have verified that data can now be shared with safety through Confirmation of Payee (CoP) using Open Banking rails. CoP is known for fraud prevention, reducing losses and enhancing a bank’s repertoire as a reliable, trustworthy, and safe guardian of customers’ money. Yes, CoP is in direct combat against APP scammers. The top ten banks and 49 other banks have built barriers to protect data from breaches; the fraudsters have now shifted their focus to small banks. Fathoming this constant struggle between the banks and scammers, Technoxander’s CoP (Confirmation of Payee) service assists banks and financial institutions in conducting smart name checking. This step assures UK payers that the payment is paid to the correct recipient. Technoxander’s CoP service delivers efficient services to banks and provides an additional layer of security. The real-time service and quick checking of the payee’s name (with Sort Code and Account Number) matching the account holder’s name at the payee bank is a seamless process when using Technoxander’s CoP. The above services are built for banks and building societies. The solution is compliant with Pay.UK requirements and can be easily used as a Native solution or SaaS. It can be noted that with the rise of APP fraud in the finance industry within the UK, CoP has reduced the attack on money drastically. Here, Technoxander is making a mark by helping banks save customers’ money from scammers throughout the UK. To learn more about the world of CoP and how it prevents APP fraud, please get in touch with the Technoxander team for a no-obligation chat. Authorised Push Payment (APP) fraud has spread like wildfire in the UK. According to UK Finance, APP fraud increased from £208 million in the initial months of 2020 to £355 million in 2021. The trend followed in the second half of 2021, with APP fraud reaching £819 million. This growth in APP scams is staggering and can cause paramount harm to customers. APP scams occur when an individual authorises their respective Payment Service Provider (PSP) to transfer money to an intended payee’s account. In an APP scam, the payer is duped into making a push payment into an account held by a fraudster. What’s more, there were approximately 189,000 reported APP scams in 2021 on personal accounts. It is a surge of 30% from 2020. According to UK Finance, the UK banks reimbursed £207 million from the total £479 million of APP fraud, amounting to 43% of the refund. These scams force customers to suffer emotionally and financially; banks also suffer heavy financial and reputational losses. Fathoming the continuing challenge, the payment processes must be secure; thus, PSPs must take stringent measures to stop APP scams. Banks have verified that data can now be shared with safety through Confirmation of Payee (CoP) using Open Banking rails. CoP is known for fraud prevention, reducing losses and enhancing a bank’s repertoire as a reliable, trustworthy, and safe guardian of customers’ money. Yes, CoP is in direct combat against APP scammers. The top ten banks and 49 other banks have built barriers to protect data from breaches; the fraudsters have now shifted their focus to small banks. Fathoming this constant struggle between the banks and scammers, Technoxander’s CoP (Confirmation of Payee) service assists banks and financial institutions in conducting smart name checking. This step assures UK payers that the payment is paid to the correct recipient. Technoxander’s CoP service delivers efficient services to banks and provides an additional layer of security. The real-time service and quick checking of the payee’s name (with Sort Code and Account Number) matching the account holder’s name at the payee bank is a seamless process when using Technoxander’s CoP. The above services are built for banks and building societies. The solution is compliant with Pay.UK requirements and can be easily used as a Native solution or SaaS. It can be noted that with the rise of APP fraud in the finance industry within the UK, CoP has reduced the attack on money drastically. Here, Technoxander is making a mark by helping banks save customers’ money from scammers throughout the UK. To learn more about the world of CoP and how it prevents APP fraud, please get in touch with the Technoxander team for a no-obligations chat.
‘Confirmation of Payee’, a.k.a. CoP is combating APP fraud
A drastic surge in Authorised Push Payment (APP) fraud took over the world with a storm during the pandemic. The fraudsters searched for innovative ways to target people and attack their banks and financial institutions for APP fraud. Worldwide lockdown increased digital payment transactions, which worsened the situation irrespective of innumerable security steps integrated by the finance industry. According to UK Finance, millions of pounds are lost to APP scams, with numbers increasing continually; this has become a severe problem for the finance sector. More than 90% of the respondents in a survey stated that APP scams are the highest priority amongst fraud prevention activities for 2022. Additionally, 43% of the surveyed people stated that using CoP reduced APP scams. It cannot be overlooked that fraudsters put painstaking effort into APP fraud. The customer is duped into authorising payments into a fraudulent bank account. People’s personal information is targeted who are further convinced to authorise transactions. To solve the above challenges, the Confirmation of Payee (CoP) service was launched in March 2020, with SD10 banks, Payment Systems Regulator (PSR), and Payment Service Providers (PSPs) implementing, securing, and fastening the payment processes in the UK by 90%. Banks now initiate the Confirmation of Payee checks in large volumes, averaging 1 million daily. Understanding the situation’s urgency, Technoxander emerged as a ground-breaking leader in filling this gap in the market. Technoxander’s Confirmation of Payee (CoP) is the ultimate solution, with an intelligent account checking service assuring UK payers that payments are made to the intended recipient. Confirmation of Payee (CoP) service benefits both personal and business clients. The service offered is real-time and is a quick and easy method of checking if the payee’s name for the Sort Code and Account Number matches the account holder’s name at the payee bank. The CoP service works for payments initiated by banks and building societies. The service complies with Pay.UK requirements and can be implemented as a SaaS or Native solution. It is imperative to consider that although CoP is the new tool used by several banks and financial institutions, adding this multi-layer approach will significantly remove the impending danger. Banks can personalise and customise communication with customers who encounter APP fraud scenarios. CoP matching names is one step towards reducing fraudulent cases and is doing so on a global platform. To learn how to increase security from APP fraud, contact Technoxander to resolve doubts and queries. Our expert and prompt team will be happy to assist you.
