Scam Recovery and Bank Reimbursement

Authorised Push Payment (APP) fraud occurs when a fraudster tricks you into sending money from your bank account to their account (or an account they control). Common examples include:

• Impersonation scams: Someone pretends to be your bank, HMRC, the police, or a trusted company and tells you to move your money for safety reasons.
• Investment scams: You are persuaded to invest in fake schemes — cryptocurrency, property, forex trading — that do not exist.
• Romance scams: You develop a relationship online with someone who eventually asks for money.
• Purchase scams: You pay for goods or services (a car, a puppy, concert tickets) that are never delivered.
• CEO/mandate fraud: Fraudsters impersonate a director or supplier and instruct a business to change payment details.

The PSR reimbursement rules cover payments made via Faster Payments (including online banking, mobile banking, and instant bank transfers) and CHAPS (same-day high-value transfers). They do not cover:

• Cash payments
• Cheque payments
• Credit or debit card payments (different chargeback rules apply)
• International bank transfers (SWIFT/SEPA)
• Payments to cryptocurrency exchanges directly

The Payment Systems Regulator's mandatory reimbursement rules for APP fraud came into force on 7 October 2024. Key features:

• Maximum reimbursement: £85,000 per claim. This covers the vast majority of consumer APP fraud losses. Amounts above £85,000 are at the bank's discretion.
• Who is covered: Consumers (individuals), micro-enterprises (businesses with fewer than 10 employees and annual turnover below £2 million), and charities with annual income below £1 million.
• Who pays: The cost is shared 50/50 between the sending bank (your bank) and the receiving bank (where the money went). This gives both banks an incentive to prevent APP fraud.
• Excess: Banks may charge a maximum excess of £100 per claim. Many banks have voluntarily waived this.
• Timing: Banks must make a reimbursement decision within 5 business days (or up to 35 business days for complex cases). They must reimburse promptly after a positive decision.
• Vulnerable consumers: Banks must not apply an excess to claims from vulnerable consumers, and must apply higher care standards.

The rules are mandatory — banks that participate in Faster Payments are legally required to comply. If your bank is not a direct participant (for example, some smaller banks and fintech firms), check whether your bank has signed up to the PSR scheme or has an equivalent voluntary policy.

Banks can decline reimbursement in limited circumstances:

• Gross negligence: You failed to take reasonable steps that an ordinary person would take — for example, ignoring explicit, clear warnings from your bank about the risk of fraud when making the payment. The threshold is high — ordinary carelessness or being deceived by a sophisticated scam does not meet this standard.
• Dishonesty: You knowingly made a false claim or submitted a claim knowing the payment was not fraud (for example, participating in a money mule scheme).
• First-party fraud: You sent the money yourself and are not a victim.

Banks cannot refuse reimbursement simply because:

• You did not use two-factor authentication
• You clicked on a link in a phishing email
• You were deceived despite the bank giving general fraud warnings
• You are embarrassed about being scammed (vulnerability considerations must be applied)

If your bank refuses your claim, ask them to provide their reasons in writing. You have the right to escalate to the Financial Ombudsman Service.

If your bank refuses to reimburse you, or does not respond within the required timeframe, you can take your complaint to the Financial Ombudsman Service (FOS). The FOS is independent and free to use:

1. Complain to your bank first: You must give your bank 8 weeks to resolve your complaint before going to the FOS (or they must issue a final response letter rejecting your claim sooner).
2. Submit to the FOS: Visit financial-ombudsman.org.uk or call 0800 023 4567. Submit your final response letter from the bank and all evidence of the fraud.
3. FOS investigation: The FOS will investigate and make a binding determination. If they find in your favour, they can order the bank to reimburse you plus interest, and may award up to £375 in compensation for distress and inconvenience.

Time limit: You must complain to the FOS within 6 months of receiving your bank's final response letter (or within 6 years of the fraud if no final response was issued).

The FOS has been upholding a high proportion of APP fraud complaints against banks. Even if your fraud occurred before October 2024, the FOS can still consider whether your bank took adequate steps to prevent the fraud under the pre-existing Contingent Reimbursement Model (CRM) code.