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Join Which? MoneyOne year of the bank transfer fraud scheme: why are 30% of claims rejected?
It's the anniversary of a ground-breaking scheme that has seen 88% of losses returned to victims, but here's why your claim could be dismissed
It's been one year of radical fraud protections for bank transfer fraud victims and reimbursement rates remain relatively high, yet 30% of cases were deemed to be out of scope in the first nine months of the scheme.
On 7 October 2024, the Payment Systems Regulator (PSR) introduced new rules requiring firms to reimburse victims of authorised push payment (APP) fraud within five business days in all but exceptional cases.
So, how has the scheme worked so far, and what do you need to know about making a claim?
Reimbursement rates under the fraud scheme
The latest data suggest that the scheme is working broadly well, with 88% of losses returned to victims. Although not directly comparable, the reimbursement rate was 68% in 2023, when only a weaker, voluntary scheme was in place, and the worst banks reimbursed as little as 9% of losses.
Less positive is the news that the percentage of claims resolved within five days has fallen slightly, and the percentage of claims deemed to be out of scope – and therefore rejected – has risen.
Between April and June 2025, victims reported around 72,000 claims, of which 48,500 were considered within the scope of the scheme, resulting in 33% being dismissed by payment firms.
The maximum APP fraud victims can claim is £85,000, and the sending and receiving firms split this cost between them. Firms can ask customers (excluding those considered vulnerable) to pay a £100 ‘excess’, though some banks don't apply this, or reduce it to £50.
| Oct-Dec 2024 | Jan-Mar 2025 | Apr-June 2025 | |
|---|---|---|---|
Total claims | 46,000 | 62.600 | 72,000 |
Rejected | 27% | 30% | 33% |
Losses reimbursed | 87% (£27.6m) | 88% (£38.4m) | 88% (£45.7m) |
Resolved 5 days | 83% | 88% | 82% |
Source: Payment Systems Regulator, covering 7 October 2024 to 30 June 2025.
'I lost £1,689 to the Mum and Dad scam'
Alan Graham, 69, from North Yorkshire, told Which? that his bank, First Direct, was 'brilliant' when he discovered he had been scammed at the beginning of 2025. It refunded the money in full after a short investigation, minus a £100 administration fee.
'It started with a text from our daughter, who lives two hours away, saying she had dropped her phone in water. We were annoyed, especially as we'd recently contributed money towards a new Samsung for her. Later that afternoon, another text arrived asking us to pay £1,649 for a new MacBook Pro.
'As older parents, we weren't familiar with this product, but it wasn't unusual for us to help our vulnerable daughter financially, and she always repays us promptly. The texts were signed off with "xx", as hers always are.
Alarm bells rang when the payee's name sounded foreign, rather than a company. I started drafting an email to investigate, but my wife stopped me, saying she'd received another text from our daughter reassuring her that the payee was someone she'd used before.
'I tried calling our daughter, but she didn't answer – also not unusual, as we later found out she was in the shower. Since the payee details matched what we'd been given, I went ahead with the payment. Five minutes later, our daughter Helen called, asking what was wrong.
'I immediately contacted First Direct, which confirmed we'd fallen victim to the "Hi Mum and Dad" scam, which ironically, I had read about in Which?.
We'd lowered our guard because it involved our daughter, the texts seemed authentic, and we were preoccupied with car troubles and a plumber fixing our thermostat. We were left feeling embarrassed and chastened by the experience.'
- Find out more: the biggest scams of the past five years.
Why are some fraud claims rejected?
Scam victims reported approximately 181,000 claims in the first nine months of the scheme, but only 126,000 were considered in scope for reimbursement.
There are valid reasons that a payment firm might reject your fraud claim under the APP fraud scheme, including:
- You moved money using another payment system: only bank transfers using Faster Payments are covered, not other methods such as credit or debit card payments or transfers from cryptocurrency exchanges.
- You sent the money to an international account: only bank transfers to UK accounts are covered.
- You have a civil dispute the scheme doesn't apply to disputes with a legitimate business
- You were particularly careless: Under the 'consumer standard of caution', your bank can reject your claim if it has evidence that you were particularly careless or complicit in the fraud.
The PSR only publishes data showing the percentage of claims dismissed due to the customer not being cautious enough (4% in Q2 2025), so we don't have insight into the most common reasons that claims are rejected.
But, Which? knows banks can mishandle complex cases, for example, distinguishing between a scam and a civil case isn’t always clear-cut, and we have previously flagged our concerns that banks unfairly dismiss cases involving complex investment fraud and disputes against rogue builders.
We've also heard from APP fraud victims who were discouraged from making a formal reimbursement claim because their bank's customer services team incorrectly told them that they were not eligible under the new scheme.
We would encourage victims of any scam to escalate their complaints to the Financial Ombudsman Service (FOS) if they think their claims have been unfairly dismissed.
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Why you need to fight your corner
Which? recently shared exclusive FOS data which showed some banks have uphold rates of more than 40% so far in 2025 – this is the percentage of complaints where the FOS found in favour of the customer, indicating customers were wrongly denied reimbursement.
Always ask the FOS to review your complaint if you think you've been treated unfairly.
You could have a strong case for reimbursement if, for example, your bank or another payment firm involved in the scam missed an opportunity to prevent losses.
No matter how you sent the money, payment firms are expected to be on the lookout for account activity that might suggest a customer is at risk of financial harm, including intervening when they spot unusual or out-of-character transactions.
And if you've lost more than £85,000 to APP fraud (the reimbursement cap under the new scheme) and your payment provider won't refund the rest, the FOS can look at your claim because it has a higher compensation limit of £430,000.
A Which? survey of fraud victims in 2024 found that 32% didn’t make a complaint to the FOS because they hadn’t heard of it – the same proportion as our 2022 survey of fraud victims.
Payment firms must do a better job of informing victims that they are entitled to escalate their case to the FOS to be independently reviewed.
The future of the fraud scheme
To ensure that it’s working as intended, an independent review of the scheme will soon be underway, with a report due by the end of spring 2026.
Pressure from the industry has already seen the proposed compensation limit reduced from £415,000 (in line with the FOS at the time) to £85,000 – protections must not be diluted any further.
The reimbursement scheme provides a vital safety net for victims of fraud and gives payment firms a clear incentive to clamp down on criminals abusing the UK payments system. But more can be done.
Which? wants to see continued investment in fraud detection technology, effective warnings before payments are made, and faster action to freeze stolen funds. A proper assessment must also be made of why so many claims have been ruled out of scope.
More broadly, the government must implement a robust and ambitious fraud strategy later this year, which will prioritise fraud advertising on social media, search companies and telecom firms – where the vast majority of scams originate.
New laws under the Online Safety Act must be rolled out in full, with tough fines for the tech firms that fail to comply. Until then, the government risks letting millions more fall victim to ruthless online fraudsters.
