Redress Delay Criticised by Investors in
Collapsed 79th Group

In the latest reported development in this ongoing saga, investors have complained that the banking industry has yet to decide if or when victims will be compensated, and that this is a breach of The Payment Services (Amendment) Regulations 2024, new rules brought into force in October 2024 to simplify how fraud victims are reimbursed.

As part of its wider role, the Payment Systems Regulator (PSR) governs the mandatory reimbursement scheme for Authorised Push Payment (APP) Fraud. APP fraud occurs when people use online or telephone banking to transfer money to pay for goods or services, believing the transaction to be genuine. 79th Group customers would have in effect ‘authorised’ their bank to transfer funds to the company, thinking their money would be used to invest in a legitimate mini bond investment and not a ‘well-planned scam’, as one investor said.

In straightforward cases, the new reimbursement rules require that scam victims be refunded within five business days. In more complicated cases, the decision-making window has a 35-day limit, which has long since passed in this case.

Banks have defended their position, saying the ongoing police fraud investigation complicates the case and that ‘industry guidance’ is required before a verdict can be reached.

The police asked UK Finance, the trade body for the UK banking industry, to engage the financial industry:

• to establish how best to proceed in complex cases to ensure statutory deadlines are met, and
• to determine if any policy changes may be required.

A spokesperson for UK Finance said:

“The industry has aligned to ringfence this case from usual processing due to its highly complex nature – to ensure consistent outcomes, firms are holding claims until additional information is available to assist in assessing them.”

“We provide a forum to discuss these complex cases but we do not make decisions. This remains solely with firms.”

A group calling itself the 79th Group Expert Board for Investors commented:

“Victims are confused by the role of UK Finance – they and their members should explain why legislation appears to being breached, and regulators need to tell us what they are doing about it.”

People who invested with 79^th Group believed they were making a ‘safe investment’. Had claims been processed by their banks under the current mandatory reimbursement model, they could have expected to be refunded up to £85,000 in a matter of days.

The previous ‘contingency reimbursement model’, which applied to payments made before 7^th October 2024, can still be considered by banks in some instances, with decisions expected within 15 days for ‘normal’ cases (35 days for ‘extraordinary circumstances’).

Unfortunately for 79^th Group investors, there has been no swift resolution, and claims remain on hold while the administration process and police investigation are ongoing, and the financial industry gathers more information on how best to proceed.

Sarah Spruce, Legal Director at TLW Solicitors, commented on the current position for 79^th Group investors:

“I really feel for all the people who have lost money after investing with the 79^th Group. APP fraud has affected hundreds of thousands of people in recent years and involves millions of pounds. Clever social engineering tactics persuade unsuspecting investors to transfer money directly from their bank accounts into the control of the fraudsters. The new rules should have made it easier for fraud victims to get their money back, but in complicated cases, we are seeing long delays, which only add to people’s frustration and worry.

We have a specialist legal team at TLW Solicitors helping many people who have fallen victim to a wide range of Authorised Push Payment investment scams. Don’t feel embarrassed or shy about asking for help: please contact us to discuss the options available and your next steps.”