Victims of fraud will only be able to claim a maximum of £85,000 from banks, down from £415,000, in a move described as “outrageous”.
There has been a rise in authorised push payment (APP) scams, which work by tricking people into sending money to a bank account owned by criminals.
The plan was to introduce the £415,000 limit on October 7th, but that looks to be reduced following pressure from ministers, lenders and fintech firms.
A consultation on the limit could be announced as soon as Wednesday.
Rocio Concha, Which? director of policy and advocacy, said: “It’s outrageous that the payments regulator is set to water down vital scam protections weeks before they were due to take effect and that this move follows months of lobbying from firms that refuse to take fraud seriously.
“Slashing the reimbursement limit risks exposing victims of the highest value scams to devastating financial and emotional harm and also significantly reduces crucial financial incentives for payments firms to put in place effective fraud security measures.
“This makes it more likely that scammers will continue to thrive on some payment platforms.”
The £415,000 compensation limit has been deemed too high, as some have argued that it could encourage fraudsters to work in cahoots with ‘victims’, who could then claim maximum compensation and share the money.
Treasury insiders told the Financial Times the new regime is a “disaster waiting to happen” in its current form.
Britons lost £459.7mn to APP fraud in 2023.
