Making Confirmation of Payee work for all

Knowing how to contact another person, whether by phone, text, email or even letter, is one of the more essential aspects of life. But whereas getting the wrong email address or phone number can lead to some potentially awkward situations, they are nothing compared to the financial loss that can result from getting someone's payment details incorrect. Worse still is when criminals are able to intercept the communication of account information and subvert funds intended for one party into an account that they control.

These ?Authorised Push Payment? scams, as industry lingo calls them, amounted to over £350 million in 2018 alone and have had drastic effects upon the lives and livelihoods of UK citizens and businesses. While banks and building societies will do all they can to track down the stolen funds, prevention is by far the better approach and so the industry has been developing a new service - Confirmation of Payee - that will add an extra authentication step when customers set up payments to new payees. This authentication step requires customers to enter the name of the account holder that they are paying and provides notice if that name differs from the one registered against the account.

While this may appear to be a simple solution, matching information in databases that have historically been kept confidential in order to protect customer data requires co-ordinated industry deployment. UK Finance has been playing its part by bringing the industry and potential suppliers of this service together in a series of pro-competitive and collaborative meetings to gain greater understanding of how this service will be deployed effectively for customers. We need to maximise the customer benefit and impact on fraud while avoiding any unnecessary friction and unintended consequences, such as customers being unable to make payments to valid payees.

Considerations such as how to handle nicknames, joint accounts, familial titles and corporates with multiple brand names were all discussed - as well as ways to enable computer systems to recognise misspelling or handle scenarios where a customer may not know the exact name of the person they want to pay. Making sure that data is available, while still being secure and ensuring that the responsive services we currently enjoy continue to meet demands is essential to ensuring that consumers are not disadvantaged by this introduction.

Indeed, this solution is considered a vital one by the industry. The Payment Systems Regulator (PSR) has just announced its revised plans on a direction to ensure a co-ordinated roll-out of this service by the industry. This will ensure that the major providers of retail accounts will all go-live with this service at the same time, meaning that there is a consistent implementation of this feature for consumers and small businesses and that there is sufficient time for it to be introduced in a way that delivers an effective customer experience.

But Confirmation of Payee is by no means a silver bullet, and the industry's anti-fraud innovations will often only provide temporary relief until fraudsters find ways to mitigate them. The Take Five to Stop Fraud national campaign urges customers and businesses to stop and consider whether a payment situation is genuine and think if what they are being asked to do really makes sense. Consumers should always be cautious when setting up a new payee, particularly for a one-off, large sum of money. Good practices such as contacting the payee via telephone, checking older communications and getting new contact details from a public website are all actions each one of us can take to help prevent fraud. For a well-functioning market, it will be necessary for all parties to work together to combat fraudulent behaviour and enable a safer and better functioning financial system.