The UK’s six biggest banking groups already offer the service
Confirmation of Payee has had a positive impact since it was introduced in 2020
The PSR is looking at the best way to ensure all banks and building societies use Confirmation of Payee
Today, the PSR has published its call for views on the second phase of delivering Confirmation of Payee (CoP), which is a name-checking service designed to prevent Authorised Push Payment (APP) scams and misdirected payments.
Every year thousands of individuals and businesses fall victim to APP scams – where they are tricked into sending money to an account controlled by a fraudster. There are also a significant number of accidentally misdirected payments that are not recovered. These losses can be significant and life changing. In 2020 alone, APP scam losses totalled £479 million(1), with the actual figure including unreported losses likely to be much higher.
Payments should work safely and securely for consumers. In 2019, the PSR issued Specific Direction 10 (SD10), directing the UK’s six largest banking groups(2) to introduce Confirmation of Payee (CoP) for Faster Payments and CHAPS transactions – this was the first phase of delivering this important service. By July 2020, CoP was available to consumers of the six directed banking groups. A number of non-directed financial institutions have since implemented the service.
The PSR is keen to move on to Phase 2, which aims to enable further participation in the service by making it possible for all banks and building societies to offer CoP. This latest call for views explores the requirements to make sure the service is technically capable of operating across all bank transfers.
The PSR is also seeking views on whether it should direct additional banks, building societies and financial institutions (going further than the six biggest banking groups) to implement the service by the end of 2021.
Genevieve Marjoribanks, Head of Policy at the Payment Systems Regulator says:
“We’ve seen that the implementation of Confirmation of Payee by the UK’s six biggest banks is having a positive impact. But there’s more to do, and we must make sure we can prevent as many APP scams from happening as possible.
“We want to see all banks, building societies and financial institutions give everyone the same levels of protection when they make payments. That's why it’s important the CoP system continues to adapt to deliver those protections and allow financial institutions to provide the service to everyone.”
This latest call for views is open until 30 June 2021, after which the regulator will decide on the next steps.
The impact of Confirmation of Payee so far and why it must be rolled out more widelyFollowing the implementation of CoP, the PSR has received information from the directed banks to analyse the success of the system in reducing accidentally misdirected payments and APP fraud. Analysis of this information shows that CoP has had a positive impact on reducing the relevant types of misdirected payments(3).
For APP scams, since the start of the COVID-19 pandemic, fraudsters are using increasingly sophisticated techniques such as taking advantage of people working remotely or self-isolating to psychologically manipulate them into bypassing CoP warnings.
Another example is fraudsters convincing a victim that a ‘new’ or ‘safe’ account has been set up in a non-directed bank which doesn’t then generate a CoP warning. However, evidence seen by the PSR indicates that the use of CoP has resulted in customers abandoning potentially fraudulent transactions. Without CoP, it is possible that APP fraud would have grown even more.
Those financial institutions already using the system have also confirmed that CoP has improved security and strengthened customer confidence when making a payment to a new payee. Evidence from those financial institutions using CoP also suggests there has been a reduction in the relevant types of APP scams, whereas for those not using it, there has been an increase.
Notes to editors:
1. UK Finance data Fraud – the Facts 2021.
2. The directed banks included Bank of Scotland plc, Barclays Bank UK plc, Barclays Bank plc, HSBC Bank plc, HSBC UK Bank plc, Lloyds Bank plc, National Westminster Bank plc, Nationwide Building Society, Royal Bank of Scotland plc, Santander UK plc and Ulster Bank Limited and covers around 90% of transactions.
3. See data tables in the PSR’s call for views.