The Payments Association has called for the immediate delay of new rules from the Payment Systems Regulator (PSR), including its APP reimbursement scheme, following the resignation of the authority’s managing director (MD).

Chris Hemsley, who was first appointed MD in 2019, officially stepped down from the role last Friday.

From Monday he is replaced by David Geale from the FCA from on an interim basis for nine months.

The association, which supports 300 payments companies in the UK, EU and Asia, has shared a private briefing paper for the new interim MD which highlights "serious concerns" about the regulator's proposed Faster Payments System (FPS) rule changes which are set to come into force on 7 October.

It says that if the current changes are implemented, the prudential risk and requirements to participate in the UK payments market will "increase significantly".

The organisation has called on the PSR to delay the implementation of these rules by 12 months until after the Pay.UK case management system is fully operational; dispute resolution mechanisms are tested and operational; and the full rollout of Confirmation of Payee has been completed.

It warned that despite being a regulated payment system operator, Pay.UK lacks certain functionalities present in other global schemes, such as exceptions handling, remediation, and a dispute resolution mechanism.

The Payments Association said that with the absence of these features, the feasibility of implementing the APP fraud reimbursement scheme through Pay.UK's current framework by October is "uncertain".

Earlier this year the Treasury Select Committee criticised plans by the PSR to hand over responsibility for scam reimbursement to Pay.UK.

"This move by the PSR represents a prime opportunity to re-set the relationship between the payments industry and one of its most important regulators," said Tony Craddock, director general, The Payments Association. "We believe that to mitigate systemic risk and prevent damage to the payments industry from some of the PSR’s current plans, significant changes are needed.”

The association has also called for the reduction in the threshold for the reimbursement scheme from £415,000 to £30,000.

It says that because the average scam costs businesses £11,000 and £1,500 for members of the public, a recommended mandatory reimbursement threshold of £30,000 is still more than double the average scam for businesses and 20x the average scam for consumers.

The regulator has previously said that the reimbursement limit is in line with the maximum award the Financial Ombudsman Service can make when considering complaints.

Additionally, The Payments Association has urged the PSR to refocus on its original mission to regulate payments systems and to ensure fair access to strategic payment systems at lowest cost and least systemic risk.

"Specifically, the PSR should focus more on its statutory objective to promote competition and concentrate on supervising Payment System Operators and market infrastructure," it says.

---