In what it describes as a “step-change” in fraud protection that will see the vast majority of money lost to APP frauds reimbursed to victims, the watchdog has set a £415,000 maximum reimbursement level. Sending payment firms can – but do not have to – apply a claim excess of up to £100 if they choose to. This does not include claims made by vulnerable consumers.

Meanwhile, the cost of reimbursement will be split 50:50 between sending and receiving firms – putting incentives in at the receiving end for the first time

APP fraud has quickly become one of the most significant types of fraud in the UK, with losses totalling nearly £500 million in the last year. Consumer groups and politicians have been clamouring for banks to tackle a growing epidemic and to speed up the process of reimbursement for blameless victims.

Under the new rules, most APP fraud victims will be reimbursed within five business days and additional protections will be offered for vulnerable customers.

The PSR stresses that “consumers still need to take care when making payments” but “the onus will be on the bank to prove that they acted with gross negligence”.

Chris Hemsley, managing director, PSR, says: “Our approach incentivises banks and other payment firms to prevent APP fraud from happening in the first place while ensuring victims are protected in a consistent way.”

A Pay.UK spokesperson says: “We welcome the publication of the PSR’s finalised legal instruments for the APP reimbursement regime which place requirements on payment service providers to reimburse victims of APP fraud. We are playing our part, as directed by the PSR, in implementing the regime next year.