Banking fraud Why is the regulator slashing maximum refund to victims?

Consumer groups have attacked a regulator's decision to cut the planned maximum sum banks will have to refund to UK fraud victims from £415,000 to £85,000.

- Rupert Jones

One said it meant some people would have their lives "destroyed".

The Payment Systems Regulator (PSR) has confirmed it is launching a consultation on a reduced cap, which would take effect on 7 October, despite having previously said that a maximum of £85,000 was too low as it would "exclude a significant number of victims".

The decision means that hundreds of people a year possibly more will be left out of pocket, and some will face sixfigure losses. The watchdog now stands accused of caving in to the demands of banks, fintechs and some politicians.

The consumer body Which? was scathing about the decision, saying that victims of high-value frauds such as investment scams and those involving people transferring large sums for a house purchase "stand to have their lives destroyed by this screeching U-turn".

It added that the regulator had concluded that those people "should be abandoned to provide a small benefit for parts of the finance industry that have been warned over their role in facilitating financial crime".

How did we get here?