Webinar· 10min January 26, 2024
As the UK's banking sector braces for significant regulatory changes put forward to combat the rising trend in Authorised Push Payment fraud this year. The discussion becomes crucial for understanding and preparing for this change and how we will see the financial fraud landscape evolve.
In the webinar "2024: The Year of APP Fraud Prevention," hosted by Nick Fleetwood, Head of Data Product at Form3, industry experts Chris Ainsley of Santander and Alex Robinson of TSB Bank delved into the emerging challenges and strategies in combating Authorised Push Payment (APP) fraud.
Listen in to the full webinar discussion to learn more about how the upcoming legislation will impact UK banks, or continue reading for some of the key takeaways.
APP fraud, characterised by the deceitful manipulation of individuals into making bank transfers under false pre-tenses, is not a new phenomenon. However, its prevalence and sophistication are escalating. The Payment Systems Regulator (PSR) has intervened with new rules, significantly impacting the banking industry. These regulations are set to redefine how banks handle these fraud cases, with an implementation deadline looming in October 2024. These changes are not minor tweaks but a comprehensive overhaul of existing practices.
The response from the industry to these new regulations, as discussed in the webinar, reveals a landscape of mixed readiness and apprehension. Banks are now required to rethink their strategies for fraud prevention and customer protection. This situation presents both challenges and opportunities: on one hand, there's the daunting task of overhauling existing systems and protocols; on the other, a chance to enhance customer trust and security. However as Nick noted a key point is “the need for this to be across the across the whole scheme and every every participant being able to get to that position of readiness for implementation”.
With the 2024 deadline for the implementation of these new rules, banks are in various stages of readiness. The webinar highlighted that while some are well on their way to compliance, others are still in the early stages of preparation. The key to success here lies in not just adhering to the regulations but also in embracing the underlying intent – enhancing customer protection and fraud prevention. Banks must therefore adopt a proactive approach, seeking innovative solutions and collaborating across the sector to meet these challenges head-on.
One of the most significant changes is the introduction of new requirements for customer refunds in cases of APP fraud. The liability is now split between the bank that sends the payment and the one that receives it. This dual responsibility represents a considerable shift from previous practices. As Alex put it “the split in liability between sending and receivingbanks is much more complex model and I don't think we are clear on on all the rules at the minute for how that will work… there's a big piece about about how as an industry we're going to be organised to make that work.”
Banks must now develop more nuanced mechanisms for identifying fraud, assessing customer interactions, and determining liability. This change doesn't just require technical adaptations; it demands a cultural shift within banks towards greater responsibility and customer-centricity.
The conversation touched upon the intricacies of defining gross negligence, the necessity for specific warnings, and finding the balance between fraud prevention and maintaining customer convenience. As Chris mentions “I think there is a sort of general failure to understand what the financial organisation is trying to do on every transaction, which is let the customer make those payments as swiftly and quickly and easily as possible, without getting in the way and asking for 100 questions about it. Especially in the digital space, and especially for what could be relatively low risk transaction”.