Response to CP24/11 – “Faster Payments APP scams: Changing the maximum level of reimbursement”

CP24/11 outlines the Payment Systems Regulator’s (“PSR”) intention to lower the maximum reimbursement limit for Authorised Push Payment Frauds ("APPF") executed on the Faster Payment System ("FPS"). I make no comments on where the reimbursement limit should be set; my response focuses solely on procedural fairness and reasoning underlying the proposal.

In this response, I argue that:

a) The PSR’s reasoning in CP24/11 appears to place the interest of smaller Payment Service Providers (“PSPs”) ahead of the wider interests of other market participants. In seeking to address solvency and prudential risks said to be faced by smaller PSPs, the effect of the proposal may instead introduce market distortions, and ambiguity in the boundaries between the PSR’s mandate and the corporate duties of private firms;

b) The PSR’s general approach to CP24/11 does not, prima facie, adhere to two of the four Gunning Principles on public consultations;

c) It is recognised that the PSR’s other interventions to date have encouraged greater transparency and accountability by PSPs, and better protection for Payment System Users (“PSUs”). A proposed remedy to the issues highlighted in the foregoing is put forward.