Funding APP scam reimbursement: 2.9p per Faster Payment proposed

Nick_C

Vortigern wrote: »

Would this fee apply to standing orders?

If not, we have an obvious workaround.

Standing orders are usually paid as faster payments.

phillw

If they had implemented Confirmation of Payee then that would have reduced the amount of fraud.

Introducing a delay, during which the transaction can be reversed, the first time a payment goes to that payee would take out most of the rest.

If there was some way you could actually report push fraud so that the bank and police would investigate immediately and arrest then there wouldn't be any fraud.

boo_star

TiberUK wrote: »

I wondered what excuse banks would find to start charging us for online banking.

Why shouldn't they?

It's not like they'd foot the bill for fraud, you can't be that naive.

Everyone was going to have to pay for it one way or another.

masonic

Flobberchops wrote: »

The customer in my example hasn't paid a penny. "Scott Free" customers like this - who make up a sizeable proportion of account holders - are effectively subsidised by every customer who has an overdraft, mortgage, loan, insurance, fee-paying packaged account, etc.

...and every customer who has a credit balance.

We could simplify this to "every customer", though admittedly some do pay more than others and some might extract more out of the system than they put in.

masonic

Vortigern wrote: »

Would this fee apply to standing orders?

If not, we have an obvious workaround.

Debit card transactions and perhaps direct debits would not be.

polymaff

This is a system to cover losers who would under the recently introduced

https://www.lendingstandardsboard.org.uk/contingent-reimbursement-model-code/#contingent-reimbursement-model-crm-code

be considered not to blame - implying to me that they met the liabilities placed upon them by this code - starting at page 12 in the above document.

I wonder just how many losers do? The standards at page 12 include blame criteria such as:

(a) The Customer ignored Effective Warnings, given by a Firm in compliance with SF1(2), by failing to take appropriate action in response to such an Effective Warning given in any of the following:

(i) when setting up a new payee;
(ii) when amending an existing payee, and/ or
(iii) immediately before making the payment

(b) From [DATE TBC], the Customer did not take appropriate actions following a clear negative Confirmation of Payee result, where the Firm complied with SF1(3) or SF2(2), and those actions would, in the circumstances, have been effective in preventing the APP scam;

(c) In all the circumstances at the time of the payment, in particular the characteristics of the Customer and the complexity and sophistication of the APP scam, the Customer made the payment without a reasonable basis for believing that:

(i) the payee was the person the Customer was expecting to pay;
(ii) the payment was for genuine goods or services; and/or
(iii) the person or business with whom they transacted was legitimate.

But then it goes all wooly with concepts such as:

...the personal circumstances of the Customer; the timing and nature of the APP scam itself; the capacity the Customer had to protect themselves; and the impact of the APP scam on that Customer...

The capacity of a Customer to protect themselves includes their knowledge, skills and capability in engaging with financial services and systems...

This code came in in May. I wonder if the banks are sticking to it - or are they buckling under to those who get on to "Moneybox" or "You and Yours" giving quivering-lip interviews?

We've all noticed the effect of this code in stiffening up the process of creating or amending payment setups. This leaves me wondering just how much need there really is for this proposal?

NB my use of the term "loser" is not as a Trumpian judgement - just as a monetary fact.

eskbanker

https://www.ukfinance.org.uk/press/press-releases/uk-finance-responds-launch-authorised-push-payments-scams-voluntary-code explains that the industry had made interim funding provisions to allow launch of the code in May but that a permanent solution needed to be introduced by the end of 2019:

In situations where both the customer and their payment service provider meet the required standards set out in the Code, a customer of a firm signed up to the Code who falls victim to APP fraud will still receive their money back. To fund this compensation to victims, as an interim arrangement a number of the launch signatories of the Code have established a fund to provide reimbursements from implementation until a new long-term funding arrangement is in place no later than the end of this year. We are working with the regulators and government to establish this mechanism before the end of the year.

so I'm assuming that this proposal embodies that latter point.

I haven't seen any figures regarding invocations of the code over the first few months, so it'll be interesting to see if increased controls have reduced such scams (or indeed if the presence of a safety net has increased them!).

polymaff

That's an extra point - the Moral Hazard. When seat belts were introduced there was a rise in the risk drivers took - and how many buyers of 4x4 vehicles thought that leaving the carriageway was a thing of the past? So who knows which way the APP trend will swing if this scheme spreads beyond the current seven institutions?

Personally, I'm getting a bit fed up of bailing out others. This is a zero-sum game and I see this as yet another insurance premium which we will all be forced to pay.

Thrugelmir

colsten wrote: »

Whist I fully agree with the sentiment of your post, I don't agree that the customer hasn't paid a penny. Each and every thing a bank - online or bricks & mortar - does is paid for by customers. It might not be very transparent how we pay for it or how much a given customer pays, but pay for it we do.

Perhaps the issue is that the charging system should be fairer. With say a basic account charge of £3-£5 a month. Rather than those that borrow meeting the costs of those that don't.

EssexExile

I'm just glad they are going to limit the levy to 2.9p. 3p would've been beyond the pale.