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Calls For Tougher Action on Banks Despite APP Scams Code Update

The Lending Standards Board (LSB) published updates to the anti-fraud Contingent Reimbursement Model (CRM) code. The updates will see banks receiving scam payments play a more significant role in protecting customers. Receiving firms are now required to put more robust measures in place to stop such transfers.

The Lending Standards Board hopes the preventative step will stop Authorised Push Payment (APP) scams before money changes hands.

All signatory firms are required to put more effort into identifying accounts at risk of being used by criminals. By December 2023, these firms must monitor the payments they receive to identify suspicious payments and accounts.

Emma Lovell, chief executive officer at the LSB, commented on the updated code. She said: “It is essential that firms do all they can to stop criminals from opening bank accounts and using their services to receive scam payments. Strengthening the code’s provisions means putting in place another tripwire for fraudsters looking to steal people’s savings – not to mention the money needed for essential living costs.”

Rocio Concha Galguera
Rocio Concha, director of policy and advocacy at Which?

Rocio Concha, director of policy and advocacy at Which? explained that the code is not enough. Regulations must be introduced to make reimbursement mandatory, Concha said: “It’s good to see steps taken to make banks put in place extra checks they should have been doing anyway. However, the code’s voluntary nature means that victims still face a ‘reimbursement lottery’ depending on who they bank with.

“The government must press ahead with plans to make all banks and payment providers reimburse scam victims in the vast majority of cases and give the payments regulator responsibility for an enforcement regime with tough penalties for any firms that break the rules.”

The code has required all signatory firms to detect APP scams and introduce preventative measures to stop them since 2019. In cases when this is unsuccessful, the CRM code also requires signatories to reimburse customers.

Tackling APP scams

The Payments Systems Regulator (PSR), has proposed mandatory reimbursement for victims of APP scams of more than £100. However, the PSR proposal has recently been criticised by the Treasury. The PSR suggested that Pay.UK enforces reimbursements for scam victims . The treasury suggests that because of a conflict of interest, due to the fact it is sponsored by the banking industry, that the PSR takes control of the initiative itself.

Emma Lovell
Emma Lovell, chief executive officer at the Lending Standards Board

Lovell explained the need for change, but also why simply reimbursing victims is not enough. She said: “We share the PSR’s drive to ensure more victims are reimbursed where they are not to blame for the success of a scam but are eager to ensure that fraud detection and prevention continue to be prioritised alongside reimbursement.

“Reimbursement can repair the financial impact on the victim, but it is still very much a lose, lose outcome. Victims lose because they will feel the after-effects and trauma of being scammed even after reimbursement. Society loses as organised criminals reap the rewards of theft.

“We strongly believe that firms should continue to sign up and adhere to the CRM Code. Scammers aren’t slowing down, so we cannot take our eye off the ball. Only by stopping scams can customers truly be protected. Maintaining an industry code focused on preventing and detecting scams ensures firms have the tools to stop more scams and demonstrates their commitment to good customer outcomes and protections.”


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