Rachel Reeves, the UK Chancellor, is urging regulators to demonstrate how they are promoting the City’s competitiveness while safeguarding consumers.
Reeves’ call comes as the Treasury raises concerns about a new anti-fraud regime set to launch in October 2024, which would require banks to reimburse fraud victims up to £415,000.
The Payment Systems Regulator (PSR) has led the effort to combat fraud, particularly authorised push payment (APP) fraud, which cost UK citizens £460 million last year.
The PSR’s plan mandates that banks and payment firms cover victims’ losses, a move that has caused unease among financial institutions and fintech companies.
They worry that the new rules could encourage fraudulent claims and disproportionately impact smaller players in the digital banking sector.
The Payments Association, a trade body, recently sent a letter to the Treasury to express concerns that the new rules would encourage more fraud and drive smaller payment companies out of business.
“What is lacking in these proposed changes is accountability for social media platform where a huge percentage of fraud takes place. The proposed changes don’t address the role of social media platforms, where 60% of APP fraud originates,” said Riccardo Tordera-Ricchi, head of policy at The Payments Association.
While Reeves supports consumer protection, she emphasises that regulators must also ensure the UK’s financial services sector remains competitive globally.
This issue of balancing consumer safety with growth has sparked debates across the sector, particularly as UK financial institutions face competition from other global financial centres like New York.
The Treasury is reportedly discussing the October deadline with the PSR, with some in the banking sector advocating for lowering the reimbursement threshold and accelerating a review of the rules’ impact.
As the regulatory landscape evolves, the pressure is mounting on regulators like the Financial Conduct Authority (FCA) to ensure that policies promote growth without compromising protection.
Reeves is expected to address these issues in her upcoming Mansion House speech, emphasising financial services as a key pillar of the UK’s economic growth agenda.
Source: Payments Cards and Mobile
