FCA introduces new rules on complaints about Authorised Push Payment fraud

United Kingdom

On 14 December 2018, the Financial Conduct Authority (“FCA”) published new rules allowing victims of Authorised Push Payment (“APP”) fraud to complain to the payment services provider (“PSP”) receiving their payment.


What is APP fraud?

  • APP fraud is where a person is tricked by a fraudster into authorising the transfer of money into an account controlled by the fraudster.    
  • UK Finance data on APP fraud show there were 43,875 cases of APP fraud and total losses of £236 million in 2017.    

What is changing?

The current position:

  • Currently, in the case of APP fraud, the PSP that sends the payment, but not the PSP that receives the payment, must handle complaints in line with existing complaints handling rules in the FCA Handbook.
  • Also, as the rules currently stand, the Financial Ombudsman Service cannot consider complaints by victims of APP fraud against PSPs who have received funds, as these PSPs are not within its jurisdiction. This means that victims cannot escalate their complaints against receiving PSPs if they are unhappy with the outcome that that PSP has reached or if they have not received a response at all.

The new rules:

  • The new rules expand the obligations to handle complaints in line with complaints handling rules in the FCA Handbook to receiving PSPs.
  • The new rules also allow victims to refer their complaints about receiving PSPs to the Financial Ombudsman Service if they are unhappy with the outcome.
  • These new rules will come into force on 31 January 2019 and will apply to complaints concerning acts or omissions which occur on or after this date.

What has led to this change?

  • In September 2016, the consumer group Which? made a complaint to the Payment Systems Regulator (“PSR”) and the FCA about consumer safeguards for APP fraud.
  • The FCA and PSR then investigated APP fraud and found that receiving PSPs could do more to identify fraudulent incoming payments and prevent accounts from being compromised by fraudsters.    
  • In June 2018, the FCA published a consultation paper (CP18/16) which proposed that payment service providers (PSPs) should handle complaints about alleged fraud relating to funds they have received as a result of APPs.    
  • The FCA received 19 written responses to this consultation paper, including submissions from PSPs, firms and trade bodies, and these respondents were broadly supportive of the proposals.

Next steps:

  • Handbook changes:    
    • Firms should note the Handbook changes in the Policy Statement and adapt their practices accordingly. A copy of the Policy Statement can be found here.
  • New types of complaints:
    • Receiving PSPs should be prepared for new types of complaints that they will be required to respond to and should adapt their practices as required. We anticipate that these complaints may focus on:
    • the speed at which the PSP responded to notification of fraud;
    • the action that was taken (or not); and
    • whether the beneficiary account was properly permitted to receive/transfer the proceeds of fraud in accordance with the PSPs’ operating procedures.
  • Voluntary Industry Code:
    • The publication of the final version of the Contingent Reimbursement Model (“CRM”) Code (the “Code”) is also expected shortly. 
    • This Code will set out the circumstances when PSPs would be responsible for reimbursing APP fraud victims who have acted appropriately.
    • A draft version of the Code was published in September 2018 by the CRM steering group, which was set up in response to the Which? complaint and subsequent FCA/PSR consultation.
    • The Code is intended to come into force in early 2019 and whilst voluntary, it is anticipated to be widely adopted by PSPs.
    • For more information on the draft Code, please see our Law Now on this topic here and RegZone article here.
  • Impact of “Confirmation of Payee” systems:
    • The forthcoming “confirmation of payee” systems, which will be introduced in mid-2019, are expected to reduce the number of APP frauds. Under these new systems, account names and account details will be checked to ensure there is a match before the payment is sent.
    • The PSR’s Consultation Paper (CP18/4) on the confirmation of payee systems can be accessed here.


Please contact the authors if you would like to discuss any aspect of the new rules.