What's happened
The Payment Systems Regulator (PSR) has announced a significant reduction in the maximum reimbursement for fraud victims from £415,000 to £85,000, effective October 7. This decision has sparked outrage among consumer groups, who argue it will leave many victims vulnerable, particularly in high-value scams. The move follows intense lobbying from banks and fintechs.
Why it matters
What the papers say
According to Rupert Jones in The Guardian, the PSR's decision to cut the reimbursement cap has been labeled 'outrageous' by consumer groups, who argue that it will leave victims of high-value frauds 'abandoned'. Vicky Shaw from The Independent highlights that the new cap aligns with the Financial Services Compensation Scheme limit, but critics argue this is insufficient for those facing significant losses. Sky News reports that complaints about fraud have reached a six-year high, indicating a growing crisis in consumer protection. The Financial Ombudsman Service noted a 43% increase in complaints, emphasizing the urgent need for effective fraud prevention measures.
How we got here
The PSR had previously set a higher reimbursement cap to protect victims of fraud, particularly in cases involving large sums of money. However, increasing pressure from financial institutions has led to a reconsideration of this threshold, prompting the regulator to propose a lower limit just weeks before its implementation.
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