Annual Report of the Payment Systems Regulator 2023-2024
In a bid to promote competition, innovation, and the interests of all users in the payment systems sector, the Payment Systems Regulator (PSR) has been actively working to enhance consumer protections and improve the UK's payments landscape.
The PSR's activities from 2023 to 2024, as outlined in a recent report, have primarily focused on tackling authorised push payment (APP) scams and improving consumer protection.
One of the key highlights of the PSR's work during this period was the issuance of a final direction in September 2024. CHAPS payment participants providing retail payment services were required to reimburse consumers who fall victim to APP scams. This reimbursement requirement took effect from October 7, 2024, aligning CHAPS with the Faster Payments Service in terms of fraud victim reimbursement.
The PSR also set a maximum reimbursement level for CHAPS APP scam claims at £85,000 starting October 2024, consistent with the Faster Payments cap introduced during the same period. This replaced an earlier higher cap of £415,000 that applied to both Faster Payments and CHAPS as of late 2023, reflecting adjustments based on industry feedback.
Throughout this period, the PSR maintained active engagement with stakeholders such as the Financial Services Consumer Panel and the FCA to address consumer harm from fraud and scams in payment systems. The panel expressed concerns about lowering the reimbursement cap but acknowledged the PSR’s regulatory efforts to strengthen consumer trust, payment safety, and uniform protection across payment accounts.
Compliance monitoring is being undertaken by the Bank of England on behalf of the PSR to ensure payment providers adhere to reimbursement obligations for APP scams, with breaches subject to enforcement action by the PSR.
It's worth noting that broader regulatory changes are impacting the PSR, with government plans to dissolve the PSR and transfer its functions into the Financial Conduct Authority (FCA). This move aims to simplify oversight but raises questions on how fraud, innovation, and market dominance issues will be managed going forward.
The report, a mandatory publication under Paragraph 7 of Schedule 4 of the Financial Services (Banking Reform) Act 2013, provides a comprehensive account of the PSR's activities during the years 2023 and 2024. Established by the Financial Services (Banking Reform) Act 2013, the PSR was created with a mandate to ensure that payment systems are operated and developed in a manner that benefits all users.
In conclusion, the PSR's role during 2023-24 has been instrumental in enhancing consumer protections specifically related to APP scams, standardizing reimbursement practices across payment systems, and cooperating with other regulators and consumer groups. As it prepares for integration into the FCA regime, the PSR's focus on consumer protection and promoting competition and innovation is expected to continue.
The Payment Systems Regulator (PSR) focused on business aspects related to tackling authorized push payment (APP) scams and improving consumer protection in the financial sector from 2023 to 2024. This period also saw the PSR setting a maximum reimbursement level for CHAPS APP scam claims, aligned with the Faster Payments Service, thus catering to both businesses and consumers.
