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Fraud Reimbursement Costs Are Likely to Rise for UK Banks Push Payments/Faster
Fitch Ratings-London-18 January 2024: UK banks are likely to face higher fraud costs due to new legally binding rules from October 2024 that will require them to reimburse customers who fall victim to fraudulent payment scams, Fitch Ratings says. The increase will vary among banks given the differences in fraud reimbursement rates under the current voluntary schemes.
We expect fraud costs to remain modest relative to operating income and the increases should not materially affect Fitch’s assessment of banks’ earnings and profitability.
The rules are being introduced by the Payment Systems Regulator (PSR) and are targeted at Authorised Push Payment (APP) fraud, where retail and business customers are misled into making fraudulent payments. APP fraud takes advantage of the UK’s Faster Payments system, which was launched in 2008 and now accounts for about 40% of bank-to-bank transfers by volume, processing individual payments of up to GBP1 million almost instantly.