PSR announces plans to make more financial firms provide Confirmation of Payee
Today, the Payment Systems Regulator (PSR) has announced its plans that will see around 400 more financial firms provide Confirmation of Payee (CoP).
This essential fraud protection service will increase coverage from 92% of transactions made via Faster Payments (FPS) and CHAPS (when you make a payment transfer from one account to another) to 99% worth approximately £2.5 trillion.
CoP is the name-checking service designed to prevent accidentally misdirected payments and APP scams; one million payments benefit from the checking service every day. In 2019, the PSR directed the UK’s six biggest banking groups to implement the system. Since then, additional non-directed firms have voluntarily implemented the service and there are now 33 financial organisations offering CoP.
The regulator is keen to see more firms providing CoP protection and wants to take further action to achieve that. Earlier this year the PSR directed the transition to a new technical environment which would open the availability of the service to more financial firms.
The PSR wants CoP to be widely implemented by financial firms that send and receive Faster Payments and CHAPS payments and thinks it should be a priority for any firm yet to do so. This is particularly important as there are indications that that some firms yet to implement CoP are seeing an increase of APP fraud.
Genevieve Marjoribanks, Head of Policy at the PSR said: “Protecting people who make payments should be a top priority for all financial firms. Those that have not yet introduced Confirmation of Payee need to step up to make sure their customers are protected.
“All consumers should expect to see Confirmation of Payee checks happening when they make payments, regardless of who they use to make the transfer. That’s why these plans to increase coverage are so important.
What’s in the consultation?
The latest consultation from the regulator sets out its plans to direct approximately 400 financial firms. This will happen in two groups.
- The first group will be prioritised based on the complexity and size of the institution and/or firms where the adoption of CoP could have the biggest impact in preventing APP scams. This first group would see an increase of CoP coverage from 92% of transactions made via Faster Payments to 99%. This group would need to have implemented CoP by 30 June 2023.
- The second group includes all other firms which use either unique sort codes, or that are building societies using a Secondary Reference Data (SRD) reference type. This group would need to have implemented CoP by 30 June 2024.
The consultation closes on 8 July, and the PSR will set out its final position later in the year.
The PSR is also varying Specific Direction 11 (SD11) which was originally issued in February 2022. This will require Pay.UK to ensure the closure of the Phase 1 technical environment on 30 June 2022 rather than 31 May 2022. This change has happened as some Phase 1 participants have experienced technical issues with their migration to the Phase 2 technical environment. This has delayed their readiness to provide CoP in the Phase 2 environment before Phase 1 was formally decommissioned on 31 May 2022.
The PSR has allowed a short extension to the operation of the Phase 1 technical environment to allow delayed firms to undertake the necessary work to complete their migration to Phase 2. This will ensure that consumers remain protected while allowing more financial institutions to proceed with joining the service.