When we are asked to create a payment instruction either for our company or ourselves we are typically asked for bank account name, sort code, account number and the name of the beneficiary. The assumption is often that the “system” checks that the details are correct before allowing the payment to proceed.
We know anecdotally that this is not correct as it does not prevent CEO fraud or payment scams where people are contacted and asked to transfer sums to a new account in their name (also known as Authorised Push Payment (APP)).
Going back to 2015, Payments UK (now Pay.UK) wrote a report “World Class Payments in the UK - Enhancing the payments experience”. The report set out what developments were needed to the UK payments infrastructure to ensure it remained fit for purpose. One of the requirements was the ability to create a three-way match between the beneficiary name, the sort code and the bank account number. In addition to combatting fraud, it was seen as reducing the chance of accidently paying the wrong person / company and then hoping they would repay the funds.
Confirmation of Payee is a name checking service. When setting up a new payment, your payment provider will be able to check the name of the person or organisation you give, against the actual name held on the account.
There are three possible outcomes:
At the moment the service is focusing on “push payment” transactions, which are payments that you initiate and authorise from your account – usually internet or phone payments. Bacs payments including Direct Debits are not included for the time being; however, Pay.UK will consider whether the service can be extended to other payment providers and payment types in future.
The original deadline for implementation set by the Payment Systems Regulator (PSR) was
Given the effort required on the part of the banks as they install new systems to check payee names alongside bank account numbers and sort codes, the PSR has extended the deadlines to 31 December 2019 and 31 March 2020 respectively.
Thus, the PSR, leveraging its regulatory power, is first demanding that by 31 December 2019 Lloyds, RBS Natwest, Barclays, HSBC, Nationwide and Santander each has the capability to notify the sending bank that a payment is unmatched, requiring inter-communication between all of the 6 banks. By March, the banks will have an obligation to send confirmation of payee requests and notify the payer of the outcome, whether matched or mis-matched.
As noted above, bulk payments (such as BACS) is currently out of scope, so CoP only impacts Faster Payment or CHAPS payments. Treasurers will need to be aware that depending on their clearing bank(s), CoP will be start to be deployed in 2020. Anyone in their organisation responsible for making these types of payments will need to be educated to understand what a part-matched and unmatched payment response looks like and what actions they need to take.
The ACT Policy and Technical Team has been accepted as a member of the CoP Phase II Advisory Group. If you have any issues you’d like to raise with Pay.UK, please contact technical@treasurers.org
