By Paul O’Donoghue, Senior Correspondent
The UK is scaling back plans which would have forced finance firms to reimburse fraud victims up to £415,000 pounds.
The UK’s Payment Systems Regulator (PSR) has instead suggested setting the limit at £85,000.
The move comes following fierce lobbying from businesses and politicians opposed to the higher potential payouts.
New proposals published by the PSR said that a 2023 review looked at 250,000 instances of people being scammed.
It said in all of these cases, just 18 suffered losses of more than £415,000.
“After considering the findings and evidence provided, the PSR is consulting on a new cap,” the organisation said.
“If confirmed, this would bring the cap in line with the Financial Services Compensation Scheme (FSCS) limit which is currently £85,000.”
“The previous maximum reimbursement value had been set at £415,000, in line with the Financial Ombudsman maximum reimbursement limit at that time.”
Banks and payments companies currently reimburse victims of fraud on a voluntary basis and at varying rates.
The new regime for more consistent reimbursement is due to come into effect on October 7.
In December, the PSR said the limit for fraud payouts would be £415,000.
“Setting a limit substantially beneath £415,000 would encourage victims whose reimbursement is capped at the limit to refer a complaint to the Financial Ombudsman Service to try to recover the balance of their losses,” the PSR said.
“[This] is likely to lead to uncertainty over outcomes for both [payment companies] and consumers.”
However, the proposed £415,000 cap alarmed fintech companies and politicians.
Bim Afolami, the UK’s City Minister until the general election earlier this year, said the move had “significant problems”.
Under the PSR rules, financial institutions would only be able to avoid payouts in cases where the organisation can prove the customer acted with “gross negligence”.
The cost of reimbursement will be equally divided between the firms sending and receiving the payment. Disputes regarding reimbursement will be considered by the Financial Ombudsman Service.
Fraud victims are estimated to lose hundreds of millions a year in the UK, with approximately half refunded by financial firms.
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