HMT consultation on delaying payments where fraud is suspected

We support the proposals set out by HM Treasury in the Payment Services (Amendment) Regulations 2024 to allow Payment Service Providers (PSPs) to delay payments where they have reasonable grounds to suspect fraud or dishonesty. It will be important that PSPs strike the right balance between delaying suspected fraudulent payments to investigate further whilst not impeding legitimate payments.

We make several suggestions to improve the draft Statutory Instrument:

• the draft regulations require PSPs to inform customers of any delays, the reasons behind their decision, and what information or actions are needed to allow the payment to be made. We think this requirement should be strengthened to be of more practical use to the consumer / payer. Specifically, the PSP should be required to ensure that the reasons for the delay are sufficiently detailed and specific to enable the consumer / payer to understand why the payment is being delayed.
• we recommend that the draft regulations are amended to specify that the PSP should provide appropriate and easily accessible means for the payer to contact the PSP to discuss the delayed payment.