The voluntary code implemented to tackle bank transfer scams has proven successful, according to the regulator overseeing it. The Contingent Reimbursement Model Code (CRM code) is scheduled to be retired next week, upon the launch of a new mandatory reimbursement code for victims of bank transfer scams. The CRM code, supervised by the Lending Standards Board (LSB), has significantly increased reimbursement rates for individuals who have fallen prey to fraudsters.
Since its inception in 2019, the CRM code has been adopted by many banks to assist victims of authorised push payment (APP) fraud in recovering their funds. Data from the LSB reveals that in 2023, payment services providers reimbursed 73% of CRM code customers’ losses due to APP fraud, a notable increase from 23% in 2018, the year before the code’s introduction. The average financial loss per reported APP fraud incident decreased from £4,200 in 2018 to £1,600 in 2023 for CRM code-protected customers.
In 2023, the CRM code extended coverage to over 90% of reported APP fraud cases, marking a substantial milestone in customer protection. Emma Lovell, CEO of the LSB, commended the code for enhancing customer reimbursement prospects post-APP scam and acknowledged its positive impact on preventing such scams within the financial services sector. Lovell emphasised the importance of prevention and early detection in combatting financial crimes.
Despite the code’s accomplishments, concerns had surfaced regarding inconsistencies in its application by different banks, leading to disparities in reimbursement outcomes for individuals. In response, the LSB issued directives in June 2021 to ensure uniformity among code signatories in their reimbursement processes, identification of vulnerable customers, use of warnings, and record-keeping practices.
The forthcoming mandatory reimbursement code, to be overseen by the Payment Systems Regulator (PSR), will introduce a maximum reimbursement limit of £85,000. This adjustment follows revisions to earlier plans that proposed a maximum cap of £415,000, with the reduction justified by feedback received by the PSR. Emma Lovell emphasised the ongoing need to address and mitigate the growth of APP scams, highlighting the importance of sustained vigilance and collaborative efforts within the financial sector.
As the financial landscape evolves to combat fraudulent activities, the focus remains on enhancing customer protections and ensuring the security of digital transactions. The transition to a mandatory reimbursement code signifies a pivotal step towards reinforcing consumer confidence and safeguarding against financial exploitation in the digital age.