The Payment Systems Regulator (PSR) has moved to ensure that the UK’s six largest banking groups, covering around 90% of bank transfers, fully implement Confirmation of Payee (CoP) by 31 March 2020, by issuing a specific direction. 

The banking groups in question are Barclays, HSBC, Lloyds Banking Group, Nationwide Building Society, Royal Bank of Scotland, and Santander UK.

CoP is a 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:

• From 31 December 2019: Directed banks must respond to CoP requests. From this date banks must have the capability to talk to each other. For example, a receiving bank must be able to notify the sending bank that there is not a match. 
• From 31 March 2020:  Directed banks must send CoP requests (as above) and notify the payer of the outcome - for example, if there was a name match or a mis-match, banks should notify the person making the payment.

The direction for CoP is the result of work by the PSR focused on driving change across the industry to prevent APP scams from happening in the first place, and ensuring people are protected in the event they do fall victim to a scam. Earlier this year, the regulator drove forward the development of a new voluntary industry code that sets out how victims of APP scams can be reimbursed.

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.

The PSR says that for CoP to be effective in protecting both banks and their customers, it needs to have widespread coverage and be implemented in a timely and coordinated way. That is why it 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, commented: “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 that 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.”