diff --git a/admin/smart-rules.pl b/admin/smart-rules.pl
index 11a56373c6..9d2d0fdf10 100755
--- a/admin/smart-rules.pl
+++ b/admin/smart-rules.pl
@@ -30,6 +30,9 @@ use Koha::DateUtils;
 use Koha::Database;
 use Koha::IssuingRule;
 use Koha::IssuingRules;
+use Koha::Logger;
+use Koha::RefundLostItemFeeRule;
+use Koha::RefundLostItemFeeRules;
 use Koha::Libraries;
 
 my $input = CGI->new;
@@ -423,6 +426,37 @@ elsif ($op eq "add-branch-item") {
         }
     }
 }
+elsif ( $op eq 'mod-refund-lost-item-fee-rule' ) {
+
+    my $refund = $input->param('refund');
+
+    if ( $refund eq '*' ) {
+        if ( $branch ne '*' ) {
+            # only do something for $refund eq '*' if branch-specific
+            eval {
+                # Delete it so it picks the default
+                Koha::RefundLostItemFeeRules->find({
+                    branchcode => $branch
+                })->delete;
+            };
+        }
+    } else {
+        my $refundRule =
+                Koha::RefundLostItemFeeRules->find({
+                    branchcode => $branch
+                }) // Koha::RefundLostItemFeeRule->new;
+        $refundRule->set({
+            branchcode => $branch,
+                refund => $refund
+        })->store;
+    }
+}
+
+my $refundLostItemFeeRule = Koha::RefundLostItemFeeRules->find({ branchcode => $branch });
+$template->param(
+    refundLostItemFeeRule => $refundLostItemFeeRule,
+    defaultRefundRule     => Koha::RefundLostItemFeeRules->_default_rule
+);
 
 my $branches = GetBranches();
 my @branchloop;
diff --git a/koha-tmpl/intranet-tmpl/prog/en/modules/admin/smart-rules.tt b/koha-tmpl/intranet-tmpl/prog/en/modules/admin/smart-rules.tt
index fea01f3dd2..8d197afb3b 100644
--- a/koha-tmpl/intranet-tmpl/prog/en/modules/admin/smart-rules.tt
+++ b/koha-tmpl/intranet-tmpl/prog/en/modules/admin/smart-rules.tt
@@ -2,6 +2,7 @@
 <title>Koha &rsaquo; Administration &rsaquo; Circulation and fine rules</title>
 [% INCLUDE 'doc-head-close.inc' %]
 [% INCLUDE 'calendar.inc' %]
+[% USE Branches %]
 <script type="text/javascript">
 //<![CDATA[
 
@@ -557,6 +558,86 @@ for="tobranch"><strong>Clone these rules to:</strong></label> <input type="hidde
         </form>
     </div>
     [% END %]
+
+    <div id="refund-lost-item-fee-on-return" class="container">
+  [% IF current_branch == '*' %]
+    <h3>Default lost item fee refund on return policy</h3>
+  [% ELSE %]
+    <h3>Lost item fee refund on return policy for [% Branches.GetName(current_branch) %]</h3>
+  [% END %]
+        <p>Specify the default policy for lost item fees on return.
+        </p>
+        <form method="post" action="/cgi-bin/koha/admin/smart-rules.pl">
+            <input type="hidden" name="op" value="mod-refund-lost-item-fee-rule" />
+            <input type="hidden" name="branch" value="[% current_branch %]" />
+            <table>
+                <tr>
+                    <th>Refund lost item fee</th>
+                    <th>&nbsp;</th>
+                </tr>
+                <tr>
+                    <td>
+                        <select name="refund">
+                          [#% Default branch %#]
+                          [% IF ( current_branch == '*' ) %]
+                            [% IF ( refundLostItemFeeRule.refund ) %]
+                            <option value="1" selected="selected">
+                            [% ELSE %]
+                            <option value="1">
+                            [% END %]
+                                Yes
+                            </option>
+                            [% IF ( not refundLostItemFeeRule.refund ) %]
+                            <option value="0" selected="selected">
+                            [% ELSE %]
+                            <option value="0">
+                            [% END %]
+                                No
+                            </option>
+                          [% ELSE %]
+                          [#% Branch-specific %#]
+                            [% IF ( not refundLostItemFeeRule ) %]
+                                <option value="*" selected="selected">
+                            [% ELSE %]
+                                <option value="*">
+                            [% END %]
+                              [% IF defaultRefundRule %]
+                                Use default (Yes)
+                              [% ELSE %]
+                                Use default (No)
+                              [% END %]
+                                </option>
+                            [% IF ( not refundLostItemFeeRule ) %]
+                                <option value="1">Yes</option>
+                                <option value="0">No</option>
+                            [% ELSE %]
+                                [% IF ( refundLostItemFeeRule.refund ) %]
+                                <option value="1" selected="selected">
+                                [% ELSE %]
+                                <option value="1">
+                                [% END %]
+                                    Yes
+                                </option>
+                                [% IF ( not refundLostItemFeeRule.refund ) %]
+                                <option value="0" selected="selected">
+                                [% ELSE %]
+                                <option value="0">
+                                [% END %]
+                                    No
+                                </option>
+                            [% END %]
+                          [% END %]
+                        </select>
+                    </td>
+                    <td class="actions">
+                        <button type="submit" class="btn btn-mini"><i class="fa fa-save"></i> Save</button>
+                    </td>
+                    </td>
+                </tr>
+            </table>
+        </form>
+    </div>
+
     <div id="holds-policy-by-item-type" class="container">
     <h3>[% IF humanbranch %]Holds policy by item type for [% humanbranch %][% ELSE %]Default holds policy by item type[% END %]</h3>
         <p>