New Fraud Refund Rules
From 7 October, UK banks will be legally required to refund victims of fraud within five days — up to a maximum of £85,000 — under new rules from the Payment Systems Regulator (PSR).Until now, most banks only refunded customers voluntarily when they were tricked into transferring money to scammers — known as authorised push payment (APP) fraud. This change marks the first time such refunds are mandated by law.
Refund Cap Change
The compensation cap has been reduced from the previously suggested £415,000 to £85,000 — a move the PSR says will still cover over 99% of cases. Banks can also reclaim half the refund from the bank that received the stolen funds.However, consumer group Which? has expressed concern over the lower cap, warning of potentially “disastrous consequences” for a small number of high-value fraud cases.
Fraud on the Rise
APP fraud is one of the fastest-growing types of scam. In 2023 alone, there were 232,429 cases, with reported losses totalling £459.7 million, according to UK Finance.These new rules represent a significant step forward in consumer protection — offering faster help and accountability from banks. But continued monitoring and pressure will be needed to ensure all victims are treated fairly.
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