The Payment Systems Regulator (PSR) has confirmed its APP reimbursement scheme is still due to launch on 7 October, despite optimism from some in the industry for a U-turn on the deadline.

Industry sources told City AM on Thursday that they expect there to be a change to the rules – either a delay or an amendment to the reimbursement threshold, which is currently set at £415,000.

One source told the publication that they predict that close to the deadline “fireworks will start to go off”.

But a spokesperson from the regulator told FStech that the rules are still planned for the original deadline.

“By introducing the new reimbursement measures coming into force on 7 October, our ambition is to incentivise the entire payments ecosystem to make greater strides in tackling fraud and improving outcomes for victims,” they said. “We have extensively consulted on these measures for over two years and continue to engage closely with industry to ensure timely and effective implementation.”

The Payments Association recently urged the new economic secretary to reduce the mandatory APP fraud reimbursement maximum of £415,000 to £30,000.

In a letter to Tulip Siddiq, the association yet again expressed concerns from non-bank members that the policy will “stifle innovation” and undermine competition.

It also warned that the move could drive higher levels of de-banking, particularly amongst vulnerable or underbanked communities.

The move comes after the organisation, which represents 300 payments companies in the UK, EU and Asia, called for the immediate delay of new rules from the PSR, including its APP reimbursement scheme, following the resignation of the authority’s managing director (MD) last month.

City AM's report also suggests that Siddiq is “very worried” that the October deadline is too tight for the industry, with the publication also claiming that chancellor Rachel Reeves is “concerned” about the rules.

Silvija Krupena, Director of the Financial Intelligence Unit at financial services technology firm RedCompass Labs said that reports that the regulator could delay or change the threshold for the new reimbursement scheme shows the new rules "don’t stand up to scrutiny".

“These new rules have the potential to inflict long-lasting damage on the banking industry. While helping scam victims, solely reimbursing losses does nothing to solve the crime problem," continued Krupena. "Criminals still get away with the money and they will see the reimbursement scheme as an opportunity for a big windfall."

FStech has approached the Payments Association for comment.

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