Paul Horlock, Chief Executive of the New Payment System Operator, said:
“Sending a payment with the wrong sort code or account number is like addressing a letter with the wrong post code. It won’t reach the intended destination even if you have used the correct name – and fraudsters have become increasingly sophisticated in using this to trick people into sending money to the wrong account.
“To help combat this, we have been working on developing a new service called ‘confirmation of payee’, which will offer a way to check the name of the account holder against the account details before you set up or confirm a new payment. As the organisation that runs the UK’s retail payment schemes, we are responsible for setting the rules and standards that define how banks, building societies and other payment providers can implement the confirmation of payee service – these will be issued in October, enabling banks and other payment providers to offer the service to their customers during 2019.
“Almost 2 billion Faster Payments are now sent every year, with less than one out of 20,000 affected by this type of fraud. But even one fraud is one too many; we believe that confirmation of payee – taken together with steps being led elsewhere, such as the Take Five fraud awareness campaign, and the contingent reimbursement model which will help more victims of fraud get their money back – can play an important part in protecting customers and bringing this number down.”
More information on confirmation of payee is available here.
The Payment System Regulator has confirmed it plans to consult by December 2018 on using its regulatory powers to give a General Direction to banks and payment service providers to implement confirmation of payee. More information is available on the PSR website:
General directions are the decisions that the PSR adopts under the Financial Services (Banking Reform) Act 2013 which relate to industry participants. A general direction essentially requires participants to perform a certain action or actions to achieve a desired outcome.
The Authorised Push Payment Scams Steering Group have published their consultation on the ‘contingent reimbursement model’ here.