The confirmation of Payee system experiences delays

An additional security measure to help prevent millions of pounds worth of fraud has unfortunately been postponed until 2020 due to a delay in the banking systems.  The Confirmation of Payee was due to be introduced by July 19 to help protect customers from payments scams involving authorised push payments (APP’s).

So what are APPs Scams?

The scam usually starts with a phone call or email from the scammer claiming to be calling from your bank or legitimate company that you are doing business with. They often claim there has been unusual activity on your bank account or request a payment to be made by issuing a fake invoice. They will ask you to transfer funds to a new bank account in your own name or to pay the invoice.

As the PAYEE on the account is your own or one you are familiar with, you can be conned into believing this is a genuine transaction. The payment is processed by the banks due to the fact there is currently no process to match the PAYEE name to the account number and sort code and the payment ends up in the hands of the fraudster.

So what are the Payment Service Providers (PSPs) and the Financial Contact Authority (FCA) doing?

The PSP’s are credit institutions such as banks and building societies and they are working on a variety of methods to identify and prevent different types of fraud.

The financial industry are sponsoring specialist police units to help tackle financial fraud. This unit had 48 convictions and prevented around £94.5 million in 2018.

In May 2019, the Authorised Push Payments Scams Voluntary Code became effective. Some PSP’s have signed up to the code which provides protection to its customers against APP scams but not all have yet.

2 Factor authentication is in the process of being rolled out, this could be in the form of one-off passcodes or sound tones if you use telephone banking. You may have experienced some of these additional security checks already.

They are also working with Pay.UK to introduce the Confirmation of Payee system which will in future match the PAYEE name to the sort code and account number. This change means if you try to make a payment where the PAYEE name doesn’t match the sort code and account number, the sender will get a warning or the payment will be stopped all together. Whilst we were expecting this to be in July 19, due to the changes required by the banks and building societies IT systems, this has been delayed further and we are waiting for confirmation of a new proposed go-live date.

Is there anything you need to do?

Whilst the Confirmation of Payee has been delayed until next year, you should ensure anyone you receive payments from has your correct PAYEE account name. For example, if you are an Umbrella contractor and you have recently changed your name on your bank account without updating PayStream, after this change your payment will not be authorised or sent.

The Banking trade body, UK Finance also offers the following advice:

• Never disclose security details, such as your PIN or full banking password
• Don't assume an email, text or phone call is authentic
• Don't be rushed - a genuine organisation won't mind waiting
• Listen to your instincts - you know if something doesn't feel right
• Stay in control - don't panic and make a decision you'll regret