Lending Standards Board strengthens CRM Code to tackle APP scams

The UK’s Lending Standards Board (LSB) has updated the anti-fraud Contingent Reimbursement Model (CRM) Code, meaning it will require signatory firms receiving scam payments to better tackle Authorised Push Payment (APP) scams.

The Code’s regulator is ramping up efforts to prevent APP fraud by encouraging signatories to have measures in place designed to stop such transfers from happening.

The LSB said all signatory firms will be required to “go further” in identifying new and existing accounts “at higher risk” of being used by criminals.

By no later than December 2023, firms must be monitoring the payments that they are receiving to help them identify suspicious inbound payments and accounts that might be being used by scammers, the regulator has stated.

It said this last requirement on firms will help prevent the onward movement of funds they believe are linked to scams and then to recover the money lost by customers who fall victim to these scams.

Emma Lovell, CEO of the Lending Standards Board

Emma Lovell, chief executive officer of the LSB, said: “It is essential that firms do all they can to stop criminals from opening bank accounts and using their services to receive scam payments.

“Strengthening the Code’s provisions means putting in place another tripwire for fraudsters looking to steal people’s savings – not to mention the money needed for essential living costs.”

The CRM Code, which launched in 2019, requires signatories to reimburse customers who lose money to APP scams through no fault of their own.

The Payment Systems Regulator (PSR) is currently consulting on a proposal for mandatory reimbursement for victims of scams where more than £100 is stolen.

“We share the PSR’s drive to ensure more victims are reimbursed where they are not to blame for the success of a scam, but are eager to ensure that fraud detection and prevention continue to be prioritised alongside reimbursement,” Lovell added.

“Reimbursement can repair the financial impact on the victim, but it is still very much a lose-lose outcome. Victims lose because they will feel the after-effects and trauma of being scammed even after reimbursement and society loses, as organised criminals reap the rewards of theft.”

At Open Banking Expo UK in London last October, speakers said that the proliferation of APP scams was growing at concerning levels compared to the growth rate of traditional card fraud.

Anna Roughley, head of insight at LSB, told delegates: “Scammers and criminals are creating a burning platform for the customer at that point in time to make them unable to think rationally. An effective warning should get someone to pause and stop when going through a transaction.”