APP Scams on draft new reimbursement code - Which? response

Summary:

• Which? broadly agrees with the Authorised Push Payment (APP) Scams Steering Group’sdraft contingent reimbursement model code. The draft code is a step towards a system that is fairer to victims of APP scams and it will provide some incentives for those best placed to reduce APP scams to do so, two key aims of Which?’s 2016 super-complaint on this issue. 
• We strongly support the principle that all victims meeting their requisite level of care should be reimbursed, regardless of the actions of the sending and receiving payment service providers. We also agree with the requirements on both sending and receiving firms to identify and mitigate the risk of scams, and for sending firms to administer any reimbursement to the victim. However, the code should set out that any report of an APP scam should be treated as a complaint by both the sending and receiving firms.
• The steering group now needs to urgently agree how to fund the reimbursement of victims in ‘no blame’ cases, where the victim has met the required standard and both the sending and receiving firms have met their obligations under the code, and who will govern the code once it is in force. Choosing the right governance body is fundamentally important for ensuring that all firms involved in push payments sign up to the voluntary code and adhere to it, and for ensuring that the code, and any associated rules, keeps pace with how scams evolve.
• Victims in no blame cases should be reimbursed from a central fund that is collectively funded by a transaction charge on sending firms using Faster Payments. Of the seven options proposed by the steering group, a transaction charge, if levied on firms rather than consumers, is one of only two options that could incentivise firms involved in push payments to individually and collectively reduce the risk of APP scams, above and beyond the minimum requirements set out in the code. We are concerned that the other option, a wider contribution mechanism covering firms beyond payment service providers, will be difficult to define and agree in time for the launch of the code in early 2019.