Proposals to minimise the consumer harm caused by certain types of scams have been released following a Which? super-complaint.
The draft Terms of Reference published today by the Payment Systems Regulator (PSR) outline how it intends to review the role that bank transfer payment systems operators play in safeguarding us from scams.
This Which? super-complaint raised concerns that there is not enough protection for people who are tricked into transferring money to a fraudster.
Banks need to do more to protect customers
Vickie Sheriff, Which? director of campaigns and communications, said: ‘We welcome the PSR’s commitment to tackling the significant consumer harm caused by bank transfer fraud, following our super-complaint.
‘Banks need to do more to protect their customers, yet they currently have little incentive to put in place better safeguards and have failed to do so despite seeing customers losing life-changing sums of money.
‘We now want the PSR to take action, propose new measures and look at banks’ liability. Banks need to ensure their customers are better protected when tricked into transferring money to a fraudster.’
PSR recognises need to bolster consumer protection
The PSR’s managing director, Hannah Nixon, said: ‘Our proposed Terms of Reference show how we plan to build a clearer picture of the role payment systems operators might play in better protecting consumers.
‘All along the payments process, action needs to be taken to bolster the level of consumer protection. Detection and prevention is a vital part of combatting fraud, and the payment systems operators could play an important role in achieving this.
‘From banks and building societies to payment systems operators, businesses and customers themselves, everyone has a part to play if we are to be successful.’
New Terms of Reference
Under the proposed terms, the work will examine how other countries approach responding to and preventing this type of scam.
The PSR will also look at the approaches taken by other payment systems and in relation to other types of disputed payments.
The regulator has said that it will consider what would constitute an effective and proportionate role for operators of push payment systems in preventing and responding to bank transfer scams.
This could include new measures, such as regulatory action, or other, more industry-led, approaches.
The PSR expects to report back on its findings in the second half of 2017 and, at the same time, will give an update on the wider progress being made by the other parties involved.
It is now seeking feedback on its proposed approach, with responses due by 21 March 2017.