LETTER: Regulator puts us at risk of weaker scam protections

Originally published in the Financial Times, 13 September 2024. Permission to publish sought and granted on 13 September 2024.

Patrick Jenkins fails to recognise where responsibility for the scams epidemic really lies (“Time to decide who picks up the tab for online payment fraud”, Inside Business, September 10). 

People don’t fall victim because they’re careless but because they’re ruthlessly manipulated. Tactics used by scammers have become so sophisticated that even the most switched-on consumers can fall victim — and this is only set to get worse with the next generation of scams that make use of artificial intelligence. It is absolutely true that tech firms must be held accountable — and the Online Safety Act should soon make it possible for online platforms to be hit with multimillion pound fines if they don’t take action to tackle scams. 

The main reason fraudsters continue to thrive is because banks and payment companies let them open accounts and transfer money, often with only cursory checks or no checks at all on their true identity. 

After months of consultation, the Payment Systems Regulator, which will oversee a new mandatory reimbursement scheme, proposed that the maximum amount of money victims of bank transfer fraud could be reimbursed should be capped at £415,000, split evenly between the sending and receiving bank. This threshold would crucially give financial companies a stronger incentive to take effective action to stop criminals using their platforms. 

After unprecedented pressure from sections of the industry, the PSR now proposes to slash the limit to just £85,000. Reducing the threshold reduces this incentive — meaning all of us will be at risk from weaker scam protections as a result. 

The PSR should proceed with its original plan and the Treasury should back its full implementation from next month.