Credit, Collections & Insolvency News
Major UK banks will have checks in place to confirm the recipients of money transfers by 2020, the Payment Systems Regulator (PSR) has said. The ‘Confirmation of Payee’ service will see lenders cross-reference names with sort codes and account numbers to ensure funds are being sent to the right recipient. The Payment Systems Regulator (PSR) has announced that the UK’s six biggest banks must implement the Confirmation of Payee System (CoP) by 31st March 2020. The UK’s six largest banking groups, cover around 90% of bank transfers.
CoP is an important tool that will further protect banking customers from Authorised Push Payment (APP) scams, by helping them avoid sending payments to the wrong account or organisation. The regulator consulted on the direction – which is a rule given to specific organisations that they have to comply with – for the UK’s six largest banking groups in May 2019, setting out that:
CoP will work by checking that the name of the account a payer is sending money to matches the name they have entered. Anyone setting up a payment will be alerted if the name on the recipient account does not match, is incorrect or misspelt, meaning it can be corrected before a payment is made.
For CoP to be effective in protecting both consumers and the banks, it needs to have widespread coverage and be implemented in a timely and coordinated way. That is why the PSR is using its powers to direct members of the UK’s six largest banking groups. By reducing financial losses from APP scams and misdirected banking transfers, CoP will provide significant benefits to everyone.
Louise Buckley, Co-Managing Director of the Payment Systems Regulator, said “Today marks another significant step to making sure there are greater protections against APP scams. We have been committed to getting the right result for everyone – from driving forward the successful introduction of the voluntary industry code which came into force in May, to the implementation of Confirmation of Payee.”
“UK banks have a clear deadline by which they need to have the systems in place to make sure that people are better protected from this devastating crime, and that it stops those payments from being made in the first place. We will be monitoring this closely to make sure it is implemented effectively.”
CoP follows the successful introduction of a voluntary industry code in May 2019 – designed to give people better protection against APP scams. The Code sets out the agreed principles for greater protection of people and the circumstances in which they will be reimbursed. This is a significant step in delivering improved protections for customers.
Tom Clementson, Director of Consumer at Shieldpay, said “Banks need to get their act together and bring in proper protection for consumers. The regulator entering the ring simply confirms that this – as many have said before – is a matter of urgency. Delays have already exposed thousands more people to fraud and there is still eight months to go until the new deadline. It’s vital that increased safety checks are put in place quickly to ensure consumers do not become victims. The adoption of increasingly sophisticated technology, that verifies the identity of both parties and holds funds securely until both parties agree to their money changing hands, is essential to protecting consumers now.”
