Action Required – FCA Expectations on Authorised Push Payment (APP) Fraud Reimbursement

Yes, it’s another call to action from the FCA, and yes, it's another Financial Crime blog! New measures came into force on 7th October to support victims of APP fraud.
If you're not concerned about this in your firm or the impact of bad publicity, consider how Revolut was portrayed in this week’s Panorama programme around its approach to customers and fraud.

The FCA has intensified efforts for firms to enhance their anti-fraud systems and controls, focusing on how Payment Service Providers (PSPs) prevent harm to their customers and tackle money mules laundering funds. The focus includes:

• Implementing effective governance arrangements, controls, and data to detect, manage, and prevent fraud.
• Regularly review your fraud prevention systems and controls to ensure effectiveness.
• Maintaining appropriate customer due diligence controls at onboarding and continually thereafter to identify and prevent accounts from being used to receive proceeds of fraud or financial crime.

The FCA is also emphasising the Consumer Duty issue, noting that firms must avoid causing foreseeable harm. Specifically, if customers are scammed relating to a firm’s financial products due to inadequate systems to detect and prevent scams, or poor processes to design, test, tailor, and monitor the effectiveness of scam warning messages, this would constitute a breach of that Consumer Duty.

If your fraud detection processes are not sufficiently effective, your organisation is at risk. Consider the following:

• Do you have a dedicated fraud payment team?
• Is your transaction monitoring operational in real-time?
• Are you confident that your transaction monitoring rules are configured correctly to highlight the right issues?
• Are your alert systems flagging issues early enough for your team to manage them effectively?

This issue is rapidly becoming another hot potato that could easily burn an organisation. Here at Brighter Consultancy, we have experts who specialise in working with banks and payment providers on fraud and transaction monitoring systems and controls to ensure compliance and effectively address all APP fraud issues. Reach out for a confidential chat.