UK Finance show that in the first six months of 2017 alone over 19,000 victims were a target of APP scams involving a total amount of over £100 million.

The issue was brought to the fore by consumer group Which? in a super-complaint to the regulator expressing concern that consumers had no legal right to claim money back from their banks in such circumstances.

Which?'s position was reinforced by a review of the way banks handle APP scams conducted by the Financial Conduct Authority that found banks’ procedures were inconsistent, their existing fraud detection systems could not easily detect APP scams, and they didn’t collect enough data.

While the PSR initially sided with the banks, merely calling on the industry to do more to protect consumers, today's statement marks a reversal of its initial position on the thorny question of liability.

Hannah Nixon, PSR managing director says: "There is no silver bullet for APP scams, and some people will still, unfortunately, lose out. That’s why we’ve continued to look for a solution that could reimburse those who are scammed, and today we begin consulting on an option that we think could work.

The PSR is proposing a 'contingent reimbursement model' which sets out the circumstances when victims of APP scams would get their money back, and which bank or payment organisations should pay.

It says reimbursement would depend on whether the banks and payment organisations had met required standards - such as measures and processes that help prevent and respond to scams - and whether the victim had also taken an appropriate level of care in protecting themselves.

Richard Hayllar, a partner at law firm TLT, says that the scale and impact of APP scams on consumer accounts meant that a consultation on the issue of liability was inevitable.

"The proposed contingent reimbursement model in the announcement is likely to see a move of liability towards payment service providers and greater reimbursement of victims of those scams," he says. "However, much of this will turn on the interpretation of 'requisite level of care' for consumers and 'best practice standards' for payment service providers. It is vital that the industry engages with the consultation so that any measures agreed are practical and workable."

PSR MD Nixon says: “To be successful, the model must be pragmatic: consumers will need to be vigilant and protect themselves, but equally we expect banks and payment service providers to uphold best practice - and when they don’t there should be reimbursement.”