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UK regulators are set to dramatically scale back a new regime that would have forced banks and payment companies to reimburse fraud victims up to £415,000, after strong pressure from ministers and fintech firms.
The new maximum fraud payout is now expected to be set at just £85,000, according to people briefed on the plan, amid fears the higher level could have seen criminals exploit the compensation system and potentially put smaller fintech firms out of business.
Treasury insiders had called the planned new regime, set to come into effect on October 7, “a disaster waiting to happen” but consumer advocates insisted it would offer “vital protection for scam victims”.
After months of wrangling, the Payment Systems Regulator, the watchdog responsible, is said by people briefed on the plan to be looking at an £85,000 payout limit for fraud victims. Industry bodies such as UK Finance had pushed for the lower limit.
This is a developing story
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