The Analysis News & Opinions


Review of the CRM Code for authorised push payment fraud


2019,


A new report of the review into the Contingent Reimbursement Model Code for Authorised Push Payment (APP) scams has been published following an industry wide consultation. The voluntary code, launched in May sets out consumer protection


standards to detect, prevent and respond to APP scams. Signatory firms make a commitment to reimburse customers who lose money where they were not to blame for the success of a scam. The review carried out by the Lending


Standards Board (LSB) sought to better understand how effective the code is in achieving its objectives to provide greater consumer protection, as well as to understand the impact it has had on the volume of scams taking place.


The report published last month


evidences support for the principles of the code, stating that many respondents agreed that it works to address what was a clear gap in the payment landscape. The LSB reports that when applied correctly, the code provides the framework to broaden protections for customers. To address


inconsistencies Evidencing the success of the code is in the


application and awareness of the code across firms, an issue that was raised in the consultation responses and evidenced in the LSB’s previous


thematic reviews, a


Governance and Oversight provision will be introduced to the code by the LSB. This will set a clear framework for ensuring that the code is embedded within the culture of firms, from senior management through to customer facing staff.


Government’s new plans for DROSs


Proposals have been outlined by government to increase the financial eligibility criteria for debt relief orders (DROs), helping more people deal with financial difficulties to get a fresh start. Research shows that the demand for debt


advice could increase by up to 60% by the end of 2021 and around 3 million more people than before the pandemic will need support with problem debt by the end of 2021. The government is publicly consulting on


changing the eligibility criteria to enter a DRO to: l Increase the total amount of debt allowable to £30,000 (from £20,000). l Increase the value of assets owned by the individual to £2,000 (from £1,000). l Increase the level of surplus income to £100 (from £50) per month Business secretary Kwasi Kwarteng said: “Suffering from financial difficulties places a


February 2021


huge amount of stress on people’s mental health and wellbeing, which is why we are committed to giving more people who are struggling with debt a chance for a fresh start. “Debt Relief Orders are a valuable tool


for supporting vulnerable people to get to grips with their problem debts. Our plans to increase the eligibility criteria will mean many thousands more could benefit from this help. “A DRO is a low-cost and easily accessible


debt solution that helps vulnerable people. Delivered in partnership with the professional debt advice sector, DROs protect people from creditor action and after 12 months all debt within the order is written off.” The consultation will run for six weeks


and, subject to the consultation any changes are anticipated to be put in place in Spring 2021.


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another area highlighted for improvement. The majority of consultation responses cite reimbursement levels to evidence that the code has been effective, but this is just one measure. In order to fully assess the effectiveness of the code, the LSB will work with stakeholders to define a wider series of success measures which take account of detection and prevention data. The LSB noted in the report participation


from firms in becoming signatories to the code was slower than expected. The LSB remains committed to increasing participation and will work with firms to understand the challenges that the requirements of the code can place on some business models. Emma Lovell, chief executive of the LSB


said: “The responses we received from this consultation evidence that the purpose of the code is supported by the industry, and we know that when applied correctly, it is enhancing protections for customers, but there is more to do. “The code’s objectives


focus on


prevention, detection and responding to scams. While reimbursement levels are a key metric to the success of the code, we must not lose sight of the importance of preven- tion and detection measures. Preventing customer loss and harm from scams is critical, which is why we intend to introduce new metrics across the code objectives. Part of this work will include bringing consistency across signatories for collation of data and their definitions. “As fair customer outcomes and consumer


protection remain our key principles, we will also amend the code to recognise that firms can ‘self-fund’ no blame cases. This will ensure that, while work continues within the industry to design a longer-term sustainable funding mechanism for


such cases,


customers in no blame situations are reimbursed. “We will now work with the industry


to increase consumer awareness of the code and the ever evolving risk from scams.”


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