FG24/6: Guidance for Firms that Enables a Risk-Based Approach to Payments
Pictured: Nikhil Rathi, Chief Executive at the FCA
Context
The UK has seen a significant increase in APP fraud. This is where someone is deceived into authorising a payment either:
to an account that they think belongs to a legitimate payee but is actually controlled by a fraudster, or
for something they believed was legitimate but is actually fraudulent
Reducing and preventing financial crime, including APP fraud and money laundering, is a priority and key outcome in the FCA’s Business Plan 2024/5.
The policy aims to support efforts to tackle APP fraud, where victims are tricked into sending money to fraudsters. The Amendment Regulations were introduced to support the Payment Systems Regulator’s APP fraud reimbursement requirement which came into force on 7 October 2024. The aim of the revised regulations is to give PSPs the flexibility to prevent APP fraud more effectively while minimising the impact on legitimate payments.
Content
Guidance outlines:
the requirements for delaying outbound payments and determining whether the threshold for ‘reasonable grounds to suspect’ has been met
how PSPs should use the payment delay window
obligations on PSPs if they delay an outbound transaction
the treatment of suspicious inbound payments
The Amendment Regulations enable PSPs to delay payments by up to 4 business days for the purpose of investigating transactions where the ‘reasonable grounds to suspect’ threshold is met.
Businesses Affected
PSPs
trade bodies representing PSPs
credit institutions providing payment services
payment institutions (PIs)
electronic money institutions (EMIs)
Gibraltar PSPs providing payment services in the UK
This guidance will also be of interest to consumers and micro-enterprises, including charities, consumer groups, retailers, credit unions and law enforcement agencies.
Next Steps for Businesses
Businesses should review the FCA’s updated ‘Payment Services and Electronic Money – Our Approach’ document from 22 November 2024 which sets out our final guidance.
