Everything you need to know about the new reimbursement code to protect you against scams

People falling victim to crimes such as purchase scams, romance frauds and investment scams will have the protections of a new reimbursement code from Monday

From Monday, victims of crimes such as purchase scams, romance frauds and investment scams will be protected by a new reimbursement code. Here's what you need to know about how the new code will work:.

What's changing?

A new code will require banks to reimburse individuals who have been duped into transferring money to a fraudster via bank transfer. The Payment Systems Regulator (PSR) oversees this code. Under the new rules, the costs of reimbursement will be shared between the sending and receiving banks, providing an additional incentive for the receiving firm to prevent the scam from happening in the first place.

Was there already a code in place?

Yes, a previous reimbursement code was launched in 2019, overseen by the Lending Standards Board (LSB). This code, which has now been replaced by the new one, was voluntary. The new code is mandatory.

Who will be protected under the new code?

The PSR states that the protections apply to individuals, microenterprises (those employing fewer than 10 people among other stipulations) and charities with an annual income of less than £1m.

Which types of account providers will have to follow the new code?

The new reimbursement arrangements include larger high street banks as well as smaller payment firms, building societies, and e-money firms, among others. Credit unions are not included.

What sort of payments will have the protection of the code?

The new regulations apply to UK bank transfers, specifically when funds are transferred from one UK bank account to another via the Faster Payments system or Chaps. Other payment methods, such as cards, already have their own safeguards in place.

How long will it take to receive a refund?

As of October 7, individuals can generally expect to be reimbursed within five business days of submitting a claim. However, firms can "stop the clock" if they require additional time to gather information. To prevent delays, firms must reach a decision within 35 business days.

Is there a limit to the refund amount?

The new protections have a reimbursement limit of £85,000, but banks can choose to reimburse higher amounts. There is also an optional excess of up to £100 that firms can apply, although this cannot be applied to vulnerable consumers. The optional excess means that the firm sending the payment may potentially reduce the reimbursement by a maximum of £100, depending on the individual's bank.

What if the loss exceeds £85,000?

According to the PSR, the new limit will cover more than 99% of claims. Individual firms may choose to reimburse more than £85,000. If a loss exceeds £85,000 and is not reimbursed, fraud victims can lodge a claim with the Financial Ombudsman Service (FOS), which has a compensation limit of £430,000.

What could stop me getting a refund?

People will not be refunded if they are found to have been complicit in the fraud or grossly negligent. The PSR says gross negligence is a “high bar” and this exception does not apply to vulnerable consumers.

What if a fraudster makes a payment without my say-so?

APP fraud is different to unauthorised fraud, when someone may steal your details to make payments without your knowledge or consent. In unauthorised fraud cases, people are generally entitled to a refund unless they have acted with gross negligence.

How can I protect myself from scam payments generally?

Look out for communications and warnings from your bank. Banks often send out app notifications as transactions take place, so look out for anything suspect. Banks should be contacted immediately if a scam payment is suspected. This will help them claw money back and also stop further scam payments leaving your account. The police should also be contacted.

The Take Five to Stop Fraud campaign reminds people to pause and think before making payments. People should be particularly wary when contacted unexpectedly. Criminals are experts at impersonating legitimate organisations and may also claim to be friends or family members in urgent need of cash.

The Confirmation of Payee name-checking service makes sure that the name of the person you think you are paying matches the bank details you have inputted – so if it comes up as a non-match in your banking app, this could be a warning sign that you are about to pay an impersonation scammer. Pay attention to warning messages from your bank.

Many banks have signed up to the 159 service, which helps people get through to their bank on a memorable number if they are concerned about being scammed.