The FCA proposed new rules to better protect customers of payments firms / FCA
On September 25th, 2024, The Financial Conduct Authority (FCA), the financial regulatory body in the United Kingdom, proposed new rules to better protect customers of payments firms. Use of payments firms has grown in recent years, but the FCA says it continues to see poor safeguarding practices from firms.
The FCA wrote to payments and e-money CEOs in March 2023 about their safeguarding and wind-down arrangements and has since opened supervisory cases relating to approximately 15% of firms that safeguard, to address its concerns. Funds held by payments and e-money firms are not directly protected by the Financial Services Compensation Scheme (FSCS). Instead, firms must safeguard funds which can mean customers lose money or experience delays to funds being returned if the firm fails. Under this proposing, the existing e-money safeguarding regime will be replaced with a client assets (CASS) style regime designed to work with payments firms’ business models
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The CFPB Takes Action to Stop Banks from Harvesting Overdraft Fees Without Consumers’ Consent / CFBP
On September 17th, 2024, the Consumer Financial Protection Bureau (CFBP), published guidance to help federal and state consumer protection enforcers stop banks from charging overdraft fees based on phantom opt-in agreements. Phantom opt-ins occur when banks claim they have customers’ consent to charge overdraft fees but there is no proof they actually obtained that consent. Under the Electronic Fund Transfer Act, banks cannot charge overdraft fees on ATM and one-time debit card transactions unless consumers have affirmatively opted in.
Consumer protection law enforcers should assume consumers have not opted into overdraft unless the banks can prove otherwise. The CFPB has found that some banks have been unable to provide such evidence before they charged consumers fees for overdraft loans to cover ATM and one-time debit transactions. The CFPB has observed that in many circumstances, financial institutions have created serious obstacles to consumers taking steps to anticipate and avoid overdraft fees. In fact, for a sizeable group of consumers who overdraft infrequently, they report being surprised by their most recent overdraft. The CFPB took action against Regions Bank for the bank’s unintelligible and manipulative processes that resulted in unexpected overdraft fees.
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Major retail banks to introduce Singpass Face Verification, further strengthening resilience against phishing scams
On September 19th, 2024, The Monetary Authority of Singapore (MAS) and The Association of Banks in Singapore (ABS) announced that major retail banks in Singapore will progressively implement Singpass Face Verification (SFV) over the next three months to strengthen the digital token (DT) setup process for retail banking customers.
SFV will be triggered in higher risk scenarios to strengthen and complement existing authentication methods for DT setup. SFV uses a face scan to verify a customer’s identity against national records before the customer’s DT can be activated for use. This makes it more difficult for a scammer to take over a customer’s DT by setting it up on his own device using phished credentials such as an SMS, one-time passwords (OTPs) and/or bank card information. The use of SFV is the latest security measure that banks are rolling out to protect customers from scams. Other initiatives and self-help tools include the phasing out of OTPs for bank account login by DT users and the Money Lock feature, through which customers can “lock up” specified amounts of their funds that cannot be accessed digitally. These various measures will serve to step up our collective defence against scams.
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