Confirmation of Payee

When you make a bank transfer, you provide the name, sort code and account code to send the money to.  You might reasonably expect that the bank pays attention to all three of those pieces of information and if they don’t match then warn you.

However, banks do not do this – they ignore the name and send the money to the sort code and account code regardless of who they belong to.

If you make a mistake and put the wrong sort code or account code then your money is likely to be gone – and that’s your responsibility.

Scammers know this and use various ploys to get people to transfer money to them believing it is their builder or plumber or a friend or official organisation etc.   The name does not need to match the account as no-one checks it.

Under plans from the UK’s payments operator, the name of someone receiving a payment will be as important as their banking details for the first time, in an attempt to combat fraud and the sender will be alerted if the name does not match the account.

This was supposed to happen by mid 2019, but the deadline was postponed to 31st March 2020 and let’s hope it happens this time.

This change is designed to combat cases when fraudsters mimic a genuine business and attempt to trick people into sending money to an account controlled by the fraudster.

How Confirmation of Payee Will Work

  1. When setting up a new payment, or amending an existing one, banks will be able to check the name on the account of the person or organisation you are paying.
    1. If you use the correct account name, you will receive confirmation that the details match, and can proceed with the payment
    2. If you use a similar name to the account holder, you will be provided with the actual name of the account holder to check. You can update the details and try again, or contact the intended recipient to check the details
    3. If you enter the wrong name for the account holder you will be told the details do not match and advised to contact the person or organisation you are trying to pay

“This is an important step and we would like to see the banks implement this new protection as quickly as possible, giving everyone greater protection against fraud,” said a spokeswoman for payments watchdog, the Payment Systems Regulator.

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