The LSB has published a summary report evaluating firms’ implementation of provision SF1(2) – Effective Warnings of the Contingent Reimbursement Model (CRM) Code for Authorised Push Payment (APP) scams today.

The voluntary code, launched in May 2019, sets out consumer protection standards to detect, prevent and respond to APP scams and provides a commitment to reimburse customers who lose money where they were not to blame for the success of a scam. An APP scam occurs when a customer is tricked into authorising a payment to an account that they believe belongs to a genuine payee, but is in fact held by a scammer.

The review carried out by the LSB, the primary self-regulatory body for the banking and lending industry, took place between August and November this year and assessed all nine signatory firms’ implementation of the effective warnings provision of the Code. The LSB assessed whether the systems, processes and controls within a firm maximise the opportunity to create and provide effective warnings, which would reasonably be expected to discourage a customer from proceeding with a payment which might result in them becoming a victim of an APP scam.

The summary report published today sets out the LSB’s findings and recommendations from the review. Within it, the LSB noted areas of improvement relating to effective warnings not being provided in some instances, a lack of defined assurance programmes or oversight within some firms, arbitrary thresholds being used and the need to further develop warnings.

Areas of good practice were also identified, relating to improved awareness and education of scams amongst customers, firms’ pro-active programmes of activity to enhance warnings and the use of customer feedback to better determine the success of the warnings provided. It was noted that all firms demonstrated a commitment to continually enhancing the provision and content of warnings to ensure better protection for customers.

Emma Lovell, Chief Executive of the LSB, said: ‘Overall, we found that signatory firms had taken the provision of effective warnings as a serious tool in efforts to prevent APP scams taking place. However there is still work to be done to ensure all firms are displaying dynamic and targeted warnings which are effective in making a customer stop to carefully consider whether the payment should be made. The individual reports we have issued to firms include our recommendations for how they must improve protection for their customers. We will monitor firms’ progress in embedding these recommendations and conduct a follow up review later next year.’

The LSB have issued individual reports to each firm containing recommendations and required action. They will work with firms to ensure the recommendations are implemented and breaches are remedied, tracking them through to completion with a follow up review planned for 2021. The findings from this review will also feed into the wider CRM Code review recently undertaken by the LSB, the results of which will be published in the new year.

Read the summary report here.

Access the full press release here.