The Payment Systems Regulator, the regulatory body responsible for monitoring the payment systems industry in the U.K., has published a second consultation paper requesting feedback on its proposals for a mandatory "Confirmation of Payee" service, together with a draft direction setting out deadlines by which the six largest payment services providers should provide such services.
The Confirmation of Payee service is being developed to assist in the PSR's fight against "Authorised Push Payment" scams - involving theft of money via fraudulent payment requests made to individuals and businesses - and accidental misdirected payments, which together cause millions of pounds in losses to individuals and businesses annually. Certain payment service providers have committed to introducing a Confirmation of Payee process. However, the PSR considers that progress on doing so has been too slow. The consultation closes on June 05, 2019.
Confirmation of Payee is a system which ensures that certain identifiers (including name, sort code and account number) of a payee are verified against the records of a payment services provider before a payment is made. It would apply to transactions between accounts held in the U.K. The PSR first consulted on the proposed measures in November 2018. This follow-up consultation takes account of the responses received and asks for input on the scope and content of its proposed direction on Confirmation of Payee systems. The consultation is directed at various parties, including payment services providers, businesses involved in the transaction process and those who use "payment systems" (i.e. Faster Payments Service and the Clearing House Automated Payment Service).
The draft direction would apply exclusively to the Lloyds Group, Barclays Group, HSBC Group, Royal Bank of Scotland Group, Santander Group and Nationwide Building Society, which together represent the U.K.'s six largest payments services providers, involved in around 90% of relevant transactions. Under the draft direction, these payment services providers would be required to respond to Confirmation of Payee requests from December 31, 2019 and send Confirmation of Payment requests and present responses to customers from March 31, 2020. If the PSR decides to issue the direction, it intends to do so by the end of July 2019. The direction will not apply to small payment services providers, although it is anticipated that they will follow suit in order to provide optimal service to clients.
View the Payment Systems Regulator's Consultation Paper.
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