Proposals to refund hundreds of millions of pounds to scam victims in the United Kingdom are "fundamentally flawed," legislators said in a study released on Monday.
Banks will be required to repay clients who have been duped into sending money to scammers within 48 hours, according to rules released in September by the Payment Systems Regulator (PSR).
Scams involving "authorised push payments" have become the most common sort of payment fraud in the United Kingdom, costing customers 583 million pounds ($715 million) by 2021.
Lawmakers on Britain's powerful Treasury Select Committee slammed the measures, saying obligatory payments should begin this year, not 2024.
The committee stated that the PSR's plan for Pay.UK, which manages Britain's quicker payments system, to handle reimbursements would result in a "inherent conflict of interest" because it is insured by the financial services industry.
“Putting an industry body in charge of reimbursing scam victims is like asking a fox to guard the henhouse,” said Harriett Baldwin, chair of the Treasury committee.
The PSR stated that it will take into account all criticism before releasing its final stance in May of this year, and that it regulated payment system operators such as Pay.UK.
Pay.bank UK's guarantors, according to a spokesman, had no influence on the company's decision-making. "To preserve our independence, our governance approach is approved and regulated by the Bank of England and the PSR," the representative stated.
HSBC (HSBA.L), NatWest (NWG.L), Lloyds (LLOY.L), Barclays (BARC.L), Santander UK (SAN.MC), and Virgin Money are among the banks that will be affected by the new law (VMUK.L).
Lenders have long stated that they should not bear the entire cost of online fraud, and that tech platforms used by criminals to entice victims should also pay.
A reimbursement approach is required, according to the bank lobbying organisation UK Finance, but “we need greater cross-sector action, including shared accountability for fraud prevention and reduction, to help tackle the threat at source.”
By fLEXI tEAM