What is this article about?
The launch of the RCMS and what PSPs need to do to comply with new APP fraud reimbursement requirements.
Why is it important?
The RCMS aims to help PSPs streamline fraud claim management, meet PSR obligations, and enhance consumer protection.
What’s next?
PSPs must sign the RCMS contract, onboard their teams, and prepare for compliance by the 7 October 2024 Go Live date.
Authorised Push Payment (APP) fraud remains a major challenge for the payments industry, impacting consumers and Payment Service Providers (PSPs) alike. High-value scams often involve multiple smaller transactions, revealing vulnerabilities in current payment systems. To address these persistent issues, the Payment Systems Regulator (PSR) has proposed several measures, including a reimbursement cap aligned with the Financial Services Compensation Scheme (FSCS) limit of £85,000. This cap is designed to protect consumers while incentivising PSPs to enhance their anti-fraud mechanisms and maintain a competitive market environment.
As part of its broader strategy to tackle APP fraud, the PSR, in partnership with Pay.UK, is introducing new systems to streamline the management and reimbursement of fraud claims. Central to this initiative is the Reimbursement Claims Management System (RCMS), which began onboarding service administrators on 16 September 2024, marking the start of its live operation.
For PSPs, navigating the RCMS effectively is crucial, but it brings with it specific responsibilities and requirements. This article outlines what PSP leaders need to understand about the RCMS, its alignment with wider efforts to combat APP fraud, and the necessary steps to ensure compliance.
The RCMS serves as a market-wide tool to help PSPs meet their obligations under the SD20 APP fraud reimbursement policy. It facilitates two-way communication between sending and receiving banks, streamlining the claims process and enabling accurate data reporting to Pay.UK. By 7 October 2024, all in-scope PSPs are expected to be registered and actively using the RCMS to manage claims in line with PSR standards.
The RCMS is more than just a claims processing tool; Pay.UK claims it’s a single, whole-of-market solution to help PSPs fulfil their obligations under the PSR’s SD20 requirements. By facilitating two-way communication between PSPs, the RCMS aims to:
The Reimbursement Claims Management System (RCMS) is structured into two key components: RCMS Core and RCMS Core + Claims, each tailored to help PSPs meet their obligations under the APP fraud reimbursement policy. Understanding these components is crucial for PSPs to navigate the system effectively and streamline their processes.
The RCMS Core is the foundational product designed to support all PSPs in fulfilling their SD20 obligations. It offers a suite of features focused on user management, communication, and compliance:
User access management: Service administrators can set up roles for compliance users and directory users within their organisation. This feature also allows for updates to PSP reference data, including contact details, sort codes, and account numbers, ensuring accurate and up-to-date information.
Directory access: PSPs can search the comprehensive directory to locate other registered PSPs, facilitating direct communication. This capability is particularly valuable when managing APP scam claims, allowing both sending and receiving banks to coordinate and progress claims collaboratively.
Standard A and B reporting: PSPs will initially input their Reporting Standard A data manually, in line with PSR obligations. Eventually, once all PSPs have adopted RCMS Core + Claims, the system will transition to Reporting Standard B, where data will be extracted automatically from RCMS, removing the need for manual input.
Compliance monitoring dashboard: Beginning in January 2025, the compliance dashboard will provide PSPs with insights into their compliance status. This tool allows PSPs to monitor their performance and adherence to the PSR’s APP reimbursement requirements.
Help desk: The RCMS includes a dedicated help desk, enabling PSPs to raise support tickets for incidents, system support, and compliance-related issues. This ensures that PSPs have the necessary support to navigate the system effectively.
For PSPs looking to streamline their APP scam claims processing, the RCMS Core + Claims product offers an enhanced suite of features:
Create new APP scam claims: This feature enables PSPs to initiate new APP scam claims as soon as the consumer notifies their bank. The system facilitates the 2-business-hour notification requirement to the receiving bank, as outlined in the Faster Payments System (FPS) reimbursement rules.
Receive and respond to claims: Once an APP scam claim is received, the receiving bank can use the “Opportunity to Respond” function to request the sending bank to ‘stop the clock’ if more time is needed to assess the situation.
Workflow management: The RCMS Core + Claims module supports the entire lifecycle of a scam claim, progressing it through various stages, from Assessment to Decision. This ensures that claims are processed efficiently and according to industry standards.
Automated reimbursement calculations: The system automatically calculates the reimbursement amount owed to the consumer, factoring in any applicable excess. This streamlines the claims process and reduces the risk of errors in manual calculations.
Requesting reimbursement: Once the amount owed is calculated, the RCMS facilitates the requesting of reimbursable contributions from the receiving bank. It ensures transparency and accuracy in determining how much is due to the sending bank.
Repatriation workflow: In cases where fraudulent funds are recovered, the RCMS can initiate a repatriation workflow, either mid-process or after the claim has been closed. The system will automatically calculate and split the recovered funds between the sending and receiving banks, simplifying an often complex process.
The RCMS promises several benefits, but it is not without its complexities. Here’s what PSPs can expect:
The RCMS is also designed to enhance the consumer experience during the claims process:
While the RCMS aims to standardise claims management and streamline compliance across the market, its implementation will require significant effort, particularly for smaller PSPs. Larger firms already operating under the Contingent Reimbursement Model (CRM) code may experience a more straightforward transition. However, smaller PSPs that haven’t previously followed such frameworks will need to make considerable adjustments to their processes and systems to align with RCMS requirements.
This transition involves not only adopting new workflows and data management practices but also ensuring staff are trained to use the system effectively. The RCMS provides tools to support these changes, but according to Pay.UK, its benefits will only be fully realised if PSPs actively integrate the system into their operations.
The launch of the RCMS represents a significant step towards an ostensibly unified approach to APP fraud claims management and reimbursement. While not a cure-all, it is a critical tool in the ongoing effort to protect consumers, reduce fraud losses, and streamline compliance for PSPs. By taking the necessary steps now, PSPs can position themselves to meet the new requirements and actively contribute to a safer, more transparent payments environment.
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