APP fraud reimbursement: the evidence after one year
In short: APP fraud reimbursement, mandatory over Faster Payments since 7 October 2024, cut in-scope scam losses by around 21% (about £73m a year) in its first year, the Payment Systems Regulator’s independent evaluation by Frontier Economics found on 1 July 2026. Reimbursement of losses rose from 54% to 65%. A formal consultation follows in December 2026.
The UK’s APP fraud reimbursement requirement was followed by an estimated £73 million a year fall in in-scope Faster Payments scam losses in its first year, a reduction the first independent evaluation of the policy attributes in large part to it. Frontier Economics published that evaluation for the Payment Systems Regulator (PSR) on 1 July 2026. The evaluation concludes that mandatory reimbursement changed the incentives of payment service providers (PSPs), that in-scope fraud fell, and that reimbursement of victims rose. It also records where the policy is doing less well: outcomes still vary between firms, and some fraud appears to have moved to channels the requirement does not reach. The PSR will consult on changes in December 2026.
Key findings (Frontier Economics evaluation, July 2026)
- In-scope APP scam losses over Faster Payments fell by around 21%, equivalent to about £73m a year, measured by the date each scam occurred. Source: Frontier Economics, 1 July 2026.
- Reimbursement of confirmed APP scam losses by value rose from 54% before the policy to 65% after it. Source: Frontier Economics.
- The short-term net benefit of the main quantified impacts is £17m to £29m a year, against PSP costs of £44m to £56m a year. Source: Frontier Economics.
- Out-of-scope international APP scams rose from £21m (2023) to £60m (2025); APP scams to crypto exchanges rose indicatively from about £59m to £153m. Source: Frontier Economics / UK Finance.
- Reimbursement rates ranged from 21% to 94% across individual PSPs. Source: Frontier Economics.
- 30% of fraud by value and 69% by volume originates via online platforms; 31% by value and 12% by volume via telecoms. Source: PSR, Unmasking how fraudsters target UK consumers.
| Indicator | Finding (first year) | Source |
|---|---|---|
| In-scope APP fraud, Faster Payments | Down about 21%, roughly £73m a year | Frontier Economics, 1 July 2026 |
| Scam transaction volume | About 40,000 to about 35,000 per month | Frontier Economics |
| Reimbursement rate (by value) | 54% to 65% | Frontier Economics |
| Short-term net benefit (main impacts) | £17m to £29m a year | Frontier Economics |
| PSP non-reimbursement costs | £44m to £56m a year | Frontier Economics |
| International APP scams (out of scope) | £21m (2023) to £60m (2025) | UK Finance / Frontier |
| Maximum reimbursement per claim | £85,000 | PSR PS24/7 |
What the reimbursement requirement is and where it comes from
The APP fraud reimbursement requirement makes sending and receiving PSPs share liability, equally, for reimbursing eligible victims of authorised push payment scams, up to £85,000 per claim, with payment generally due within five business days. It rests on a statutory duty: section 72 of the Financial Services and Markets Act 2023 required the PSR to impose a reimbursement requirement for qualifying Faster Payments cases. The PSR gave effect to that duty through Specific Direction 20 for Faster Payments, with parallel rules for CHAPS under Specific Direction 21 and the Bank of England’s own CHAPS reimbursement rules. The £85,000 cap was confirmed in the PSR’s PS24/7 and took effect on 7 October 2024.
The statutory route mattered because the common law offered victims little. In Philipp v Barclays Bank UK plc [2023] UKSC 25, the Supreme Court held that a bank owes no general duty to question or refuse a payment its customer has authorised, which left victims of authorised fraud without a remedy against their own bank. Reimbursement moved the market from the voluntary Contingent Reimbursement Model code, under which customers of non-signatory firms had no protection, to a mandatory regime with shared liability across the payment chain.
What the APP fraud reimbursement evaluation found
Frontier estimates that the value of APP scams sent over Faster Payments was around 21% lower per month after October 2024 than in 2023, equivalent to a fall of about £73m a year, with scam transaction volumes down from roughly 40,000 to 35,000 a month. The largest reductions came from the firms that had the highest fraud rates before the policy and had not previously reimbursed customers, which is what the incentive design predicted. Reimbursement of confirmed APP scam losses rose from 54% to 65% by value; the PSR’s own reimbursement dashboard records that 88% of claims assessed as eligible were reimbursed in the first year.
On costs and benefits, Frontier finds a positive short-term net benefit of £17m to £29m a year from the main quantified impacts, treating this as a conservative figure because APP fraud would probably have grown without the policy as online payments and AI-enabled scams increase. PSPs incurred £44m to £56m a year in non-reimbursement costs, mostly fraud detection and prevention, while total reimbursement paid across the market was broadly unchanged because lower fraud offset higher reimbursement rates. Frontier reports that the publication of APP fraud performance data increased transparency and supported firms’ internal benchmarking, but found little evidence that it directly changed prevention or reimbursement behaviour.
Where APP fraud reimbursement is doing less well
The report carries two qualifications. Displacement is the first. Frontier records that international APP scams, which fall outside the requirement, rose from £21m in 2023 to £60m in 2025, and that APP scams to crypto exchanges grew indicatively from about £59m to £153m over the same period. Most stakeholders interviewed believed fraudsters are adjusting tactics and moving activity to out-of-scope channels rather than stopping. Frontier cannot quantify how much of that shift the policy caused, and notes that after allowing for displacement and for scams not yet reported the net benefit falls to a range of minus £4m to plus £8m, which it still judges likely to be positive.
Inconsistency in how firms apply the rules is the second qualification. Frontier found reimbursement rates ranging from 21% to 94% across PSPs, driven partly by data-recording differences but also by genuine divergence in how firms apply the Consumer Standard of Caution (the exception where a consumer has not taken enough care), the optional excess of up to £100, vulnerability assessments and reimbursement above the £85,000 cap. One firm applied the caution exception in over 25% of cases by value; others did not apply it at all. The cap itself binds rarely: Frontier reports that more than 99% of reimbursable claims and more than 95% of reimbursable value sit below it. On the wider question of who should bear the cost, the report notes only that some stakeholders argued the requirement places incentives on PSPs alone, while the PSR’s own data shows most fraud originates on online platforms and telecoms networks.
The road to the December 2026 consultation
The PSR published its APP scams policy roadmap alongside the evaluation on 1 July 2026. It sets out stakeholder engagement over the summer, a formal consultation in December 2026, and a decision with revised legal directions in May 2027, to be implemented within six months. The consultation will cover the treatment of claims that cannot be resolved within 35 business days, the treatment of ‘returns from investment’ (sums a victim recovers from an investment scam), new annual data collection on the platforms and services fraudsters use, the future of the fraud performance data regime, and further guidance on the Consumer Standard of Caution, civil disputes and me-to-me transactions. The inconsistency findings are the near-term compliance point for payment firms: the divergent application of the caution exception, the excess and vulnerability assessments is exactly what the consultation is likely to address, and firms whose practice falls at the outer edge of the range are the most exposed. Firms working through their reimbursement, safeguarding and scheme governance obligations can see how Bratby Law advises on these questions on our payments product, safeguarding and scheme governance page.
This all happens as the PSR itself is being wound down. HM Treasury confirmed in its April 2026 consultation response that the PSR’s functions will transfer to the Financial Conduct Authority, subject to primary legislation. The APP fraud reimbursement regime, and the December 2026 consultation, will pass to the FCA as that transfer completes.
Viewpoint
The evaluation is careful, and its caution is the most useful thing in it. It covers one year, measured on a scam-occurrence basis that deliberately diverges from the claim-date basis UK Finance uses, and it excludes the slow-to-report investment scams that make up much of the highest-value fraud. The headline £73m is therefore a floor on a partial picture rather than a settled verdict. The spread matters more to payment firms than the net-benefit number. A reimbursement range of 21% to 94%, and a caution exception applied anywhere from never to a quarter of cases, shows the regime’s parameters are read very differently across the market, and the PSR’s roadmap puts each of those parameters on the December 2026 agenda. The FCA inherits the file mid-transfer, and how far it extends data collection beyond PSPs to the platforms and networks where the PSR’s own figures place most fraud will shape the next phase of the regime.
Frequently asked questions
When did APP fraud reimbursement become mandatory?
The requirement took effect on 7 October 2024. It applies to Faster Payments under the PSR’s Specific Direction 20 and to CHAPS under the Bank of England’s Specific Direction 21, following the duty imposed on the PSR by section 72 of the Financial Services and Markets Act 2023.
How much has APP fraud fallen since the policy?
Frontier Economics estimates that in-scope APP scam losses over Faster Payments fell by around 21% in the first year, equivalent to about £73m a year, measured by the date each scam occurred. Scam transaction volumes fell from roughly 40,000 to 35,000 a month.
What is the maximum reimbursement under the policy?
The mandatory cap is £85,000 per claim, confirmed in the PSR’s PS24/7. Frontier reports that more than 99% of reimbursable claims and more than 95% of reimbursable value fall below the cap, so it rarely binds in practice.
What will the December 2026 consultation change?
The PSR’s roadmap sets out a consultation in December 2026 on the treatment of unresolved claims and returns from investment scams, new data collection on the platforms fraudsters use, the future of the performance data regime, and further guidance on the Consumer Standard of Caution and me-to-me transactions. A decision and revised legal directions are expected in May 2027.
For advice on APP fraud reimbursement compliance, the Consumer Standard of Caution or scheme governance for a payments business, contact Rob Bratby at Bratby Law.
