Payment Systems Regulator’s (PSR) consultation CP24/8: CHAPS APP scam reimbursement requirement - Which? response

Summary:

• We welcome the PSR and Bank of England’s work on developing a mandatory reimbursement regime for Clearing House Automated Payment System (CHAPS) payments. We support the stated aim of providing a consistent outcome for victims of APP scams across CHAPS and Faster Payments System (FPS), consistent processes for payments firms, and consistent incentives on Payment Service Providers (PSPs) to prevent fraud.
• However, where there are compelling reasons to do so, a different approach should be taken for CHAPS. There are marked differences between CHAPS and FPS which mean that duplication is not always appropriate. In particular, due to the very high average value of payments made using CHAPS, its reimbursement scheme should not be subject to the same £415k maximum limit which applies to FPS. CHAPS should have no limit, or it should be substantially higher to ensure that as a minimum it covers average transaction amounts.
• In any event, we do not support the proposal for the maximum reimbursement limit to be shared between Faster Payments and CHAPS. We think each payment method should apply the maximum limit separately to avoid consumer confusion and because it is fair to do so as different mechanisms and fraud prevention measures apply to any payments concerned.
• The relatively small number of retail CHAPS payments, and the fact that PSPs will already be implementing similar standards for FPS, should mean that they should be well-placed to meet the reporting standards deadlines. Delaying implementation should not be necessary.
• The Equality Impact Assessment raises a number of potential unintended consequences from the introduction of the reimbursement scheme (e.g. de-banking and consumers being disproportionately impacted by ‘stop the clock’ measures or ‘gross negligence’ rejections). The PSR and Bank must satisfy themselves that their proposals for data collection will enable it to assess the prevalence and impact of 2 such risks so that it can be on the front foot in mitigating them. Coordination with the FCA (e.g. on de-banking) will also be essential.