The UK's mandatory Authorised Push Payment (APP) fraud reimbursement regime completed its first full year on 7 October 2025. The results, published by the Payment Systems Regulator (PSR) and UK Finance, are striking. UK payment firms have reimbursed £173 million to victims, the reimbursement rate has climbed from 59% pre-regime to 88% under the new rules, and total APP fraud claim volumes are down 15% year-on-year — suggesting the regime is incentivising fraud prevention, not just reimbursement.
The PSR, FCA and HM Treasury have jointly commissioned an independent review by Frontier Economics, due to conclude in Q2 2026. The review will determine whether the £85,000 reimbursement cap, the 50/50 sending/receiving PSP cost split and the current single-sector liability model should continue.
The Year 1 numbers
| Metric | October 2024–September 2025 |
|---|---|
| Total paid in reimbursement | £173 million |
| Reported APP fraud claims | 269,000 |
| Eligible claims | 188,000 |
| Reimbursement rate (of eligible claims, by value) | 88% |
| Prior rate (2023/24 comparable period) | 66% |
| Total APP claim volume change | -15% vs prior year |
| Claims resolved within 5 business days | 84% |
| Claims resolved within 35 business days | 97% |
| Claims rejected on customer caution grounds | Only 2% |
How the regime works
Under the PSR's Specific Direction 20 (SD20), since 7 October 2024:
- Eligible victims of APP fraud on Faster Payments or CHAPS are entitled to reimbursement up to £85,000.
- 50/50 cost split between sending PSP and receiving PSP (where the fraud involves both).
- 5 business day deadline for reimbursement, extendable to 35 days for complex cases.
- Customer standard of caution exception — reimbursement can be refused only where the customer has been "grossly negligent" (high bar).
- £100 excess — optional — not applicable to vulnerable customers.
- Vulnerable customer definition — assessed case-by-case; broader threshold for protection.
Where the fraud is coming from
UK Finance's Annual Fraud Report 2025 shows the fraud mix:
- Purchase fraud — almost 60% of victim cases. Typically fake listings on social media marketplaces.
- Impersonation of bank/police staff — £66m of losses.
- Romance scams — £31m of losses.
- Investment fraud — continuing to grow in value despite falling in volume.
- Delivery fraud — rising fast alongside e-commerce.
- Charity fraud — notable increase in 2025.
Critically, UK Finance reports that around 85% of scams originate on tech platforms — social media, messaging apps, online marketplaces — not in the payments system. The mismatch between where fraud is enabled and where it is paid for is the core of the industry's lobbying argument for cross-sector liability reform.
The Q2 2026 review — what's at stake
Frontier Economics' review is expected to address three critical questions:
1. Is the £85,000 cap the right level?
The cap was reduced from an original £415,000 proposal to align with FSCS. With FSCS now at £120,000 (from 30 November 2025), there is natural logic to raise APP reimbursement in line. However, the PSR cautioned this could incentivise fraud against the scheme.
2. Should the 50/50 cost split continue?
Smaller PSPs and electronic money institutions argue the 50/50 split is disproportionate — they may process lower volumes but have customer bases more exposed to APP fraud. A move to risk-weighted or transaction-weighted splits is on the table.
3. Should tech companies contribute?
The big political question. With 85% of fraud originating on tech platforms, the banking industry is lobbying hard for mandatory cross-sector contributions. The UK's Fraud Strategy 2026-2029 (published March 2026) partially addresses this through the new Online Crime Centre and £30m funding, but stops short of direct tech company liability for reimbursement.
Awareness remains low
Perhaps the most striking PSR finding: 71% of UK consumers are unaware of the reimbursement policy. Around 49% of fraud victims do not even attempt to access reimbursement. This has implications for:
- FCA Consumer Duty — firms must actively inform customers of their rights. Low awareness is a foreseeable harm.
- Marketing compliance — payment providers should highlight the protection as a positive feature, not hide it in T&Cs.
- Industry reputation — 42% of fraud victims actually report increased trust in their bank after reimbursement — a material reputational benefit for compliant firms.
What firms should prepare for
- Expect firm-level data publication — the PSR already publishes performance data for the 14 largest banking groups. Expansion to smaller firms is expected to follow.
- Consumer Duty integration — fraud prevention measures must meet the Good Outcomes standard.
- Reserve stress-testing — if the Q2 2026 review raises the cap or changes the cost split, reserves may need adjustment.
- Safeguarding rules (CASS 15) — new FCA safeguarding rules for e-money institutions take effect from 7 May 2026, adding further compliance overhead.
- RCMS platform adoption — the Fraud Reimbursement Platform (operated by Pay.UK) had onboarded 558 firms by February 2025, well below the 1,500 target. A mandatory adoption consultation has been delayed but is expected.
- PSR-to-FCA transfer — HM Treasury's September 2025 consultation confirmed plans to abolish the PSR and transfer functions to the FCA. Firms should expect regulatory consolidation over 2026-27.
What consumers should do
- If you are scammed — report it to your bank immediately. They have 5 business days (sometimes 35) to reimburse you.
- Keep evidence — text messages, emails, website screenshots. The firm will need them to trace the scam.
- If rejected — you can escalate to the Financial Ombudsman Service (FOS) for free. FOS sees many APP cases and sides with consumers unless there is clear evidence of gross negligence.
- If loss exceeds £85,000 — you can still claim via FOS for the balance but will need to demonstrate the bank was at fault in its handling.
Disclaimer
This article is for general information only and does not constitute legal, regulatory or financial advice. APP fraud reimbursement rules are set by the PSR under Specific Directions 19, 20 and 21 and are subject to review. Firms should refer to the PSR's own publications and the FCA Consumer Duty for their specific obligations.
FAQ
What types of scam are covered by APP reimbursement?
Authorised Push Payments via Faster Payments or CHAPS made by a consumer or small business, where the victim was tricked into sending money. Card payments, unauthorised transfers and cryptocurrency payments are not covered by SD20.
What is the maximum reimbursement?
£85,000 per claim, aligned with the Financial Services Compensation Scheme (FSCS) level. Future changes will track FSCS.
Why are smaller firms more exposed?
The 50/50 cost split between sending and receiving PSPs can disproportionately hit smaller PSPs with lower transaction volumes and higher-risk customer bases (e.g. recent immigrants or younger users more targeted by certain scam types).
