Thank you for the advice note that you sent me in January 2020. The purpose of the End User Advisory Council (EUAC) is to provide advice and challenge into Pay.UK work from an end-user perspective. Given the importance of the issue of APP fraud and the industry’s response to this crime, it is helpful to me and the Pay.UK Board to have the EUAC’s comments and concerns on this issue clearly documented. I have set out some observations in response below and go on to explain how I intend to use your advice as part of our next steps on this general area of work.
APP Fraud CRM Code
Firstly, I want to reinforce that Pay.UK is also supportive of the CRM Code and of the protections the Code offers to consumers, including customers receiving reimbursement in cases of APP Scams where the customer has met their requisite level of care. As you know we have also set out in public our support for the code as well as some of the steps we think should be taken to support the adoption and effectiveness of the code (see below).
CRM Fee Change Request
Considering the CRM Fee change request was a significant undertaking for Pay.UK. I share your disappointment that the proposal made to us was not found, for a variety of reasons, to be an appropriate long term solution to funding “no-blame reimbursement”. Despite this, it is my view that the public process that we ran to assess the proposal has helped clarify a number of key issues in this area. In general, I also think that making our findings public on issues such as this provides the opportunity to help progress thinking and discussion.
For example responses to our public Call for Information did, encouragingly, show that the vast majority of PSPs support providing reimbursement to customers in cases of “no-blame”. In addition, our work has shown that the current “no blame” funding model – whereby code signatories pay in to a central pot to pay for cases of “no blame” APP fraud – doesn’t have universal support from all PSPs which is blocking uptake of the code.
It therefore seems to Pay.UK that, in the absence of regulatory intervention to mandate the code, finding a flexible funding model that more PSPs can support will be important to further increase uptake in the voluntary code. In the longer term, we have explained our view that we consider the introduction of legislation to underpin the Code and protect the interests of victims of fraud is the best way to help deliver a consistent solution for consumers across all payment systems. I understand that you are supportive of this view.
Following our decision on the CRM Fee change request we have been engaged with UK Finance and our Participants Engagement Forum (PEF) to consider wider work in the consumer protections space. We will be presenting to your March meeting some research we have undertaken in this area, together with a scope of work for a feasibility study on the potential to use Pay.UK rules to build confidence in the use of our payment systems. In developing this scope of work we have been mindful of your concern that the industry could use Pay.UK work in this area to delay further improvements or recruitment to the CRM Code.
We think it is important that our activities, those of UK Finance and policy makers (regulators and government) are strongly co-ordinated in this area. If the scope of work for our research and policy project is endorsed by both the EUAC and our PEF, we plan to write to UK Finance to confirm support for this project and agree with UK Finance a joint approach to updating regulators and government of our respective work in this area. We would expect to reference you r advice note in those communications.
I hope this response is useful. My team will continue to apprise the EUAC of developments in this area and I would be happy to discuss the detail further at future meetings. I am sharing your advice note and this response with the Pay.UK Board.