Consultation

About Innovate Finance
Innovate Finance is the independent industry body that represents and advances the global FinTech community in the UK. Innovate Finance's mission is to accelerate the UK's leading role in the financial services sector by directly supporting the next generation of technology-led innovators. 
The UK FinTech sector encompasses businesses from seed-stage start-ups to global financial institutions, illustrating the change that is occurring across the financial services industry. Since its inception following the Global Financial Crisis of 2008, FinTech has been synonymous with delivering transparency, innovation, and inclusivity to financial services. As well as creating new businesses and new jobs, it has fundamentally changed the way in which consumers and businesses are able to access finance. 
Introduction and key points
Innovate Finance welcomes the opportunity to respond to the Payment Systems Regulator's ("PSR") Consultation Paper ("CP22/4") which sets out proposals that will require Payment Service Providers ("PSPs") to provide mandatory reimbursement to consumers who lose money to Authorised Push Payment ("APP") scams. Innovate Finance recognises that APP fraud presents a significant and growing challenge for the payments industry, and that it is important for consumers to be adequately protected in the face of increasingly sophisticated APP scams. Ultimately, consumer trust and safety is paramount if innovation and competition is to flourish in the payments sector.  
Our members support the PSR’s intended aim of providing a fair level of protection to consumers who fall victim to APP scams, and they welcome the introduction of a consistent approach to consumer protection across the industry. However, by creating an unfunded and uncapped mandatory reimbursement obligation with an extremely high bar for exceptions, our members are concerned that the liability regime will lead to a number of unintended consequences that will be detrimental to consumers and PSPs. In particular, our members are extremely concerned about the potentially devastating impacts on the FinTech sector and the repercussions for innovation and competition in the payments market, as well as the international competitiveness of the UK. 
The PSR’s mandatory reimbursement proposals are the first of its kind in the world. Hence, a careful, iterative roll out is necessary in order to ensure the UK remains the most attractive place in the world to start and scale a FinTech business. A balance must be struck so that consumers are protected from losing life-changing sums of money while innovation in digital payments can continue to grow with appropriate incentives being applied to all participants in the digital economy in order to reduce fraud.
In reviewing the consultation paper and producing our response, we have consulted with a range of Innovate Finance members that provide payment services, including neobanks, and others who are indirectly impacted or may fall within the scope of this liability framework in the future. 
Innovate Finance would be pleased to discuss this response in more detail with the PSR and/or facilitate discussions directly with our members. 
<a href="https://ww2.innovatefinance.com/wp-content/uploads/2023/08/innovate-finance-reponse-to-psr-app-consultation-cp22-4-november-2022_final.docx.pdf">Read the Full Consultation here</a>