On 12 April 2024, the Bank of England (BoE) published a Policy Statement and Consultation providing further clarification on its previously published mandatory requirements for enhanced data coming into effect in 2025 and 2026. The BoE further seeks views on its proposals for expanding the mandatory requirements for enhanced data in CHAPS payments from 2027. The BoE also reiterates its role in facilitating and working with the payments industry to realise the potential benefits of ISO 20022 enhanced data, such as improved efficiency, payment prioritisation and prevention of financial crime. Finally, the BoE signposts how the Change Management Framework for technical updates to the Real Time Gross Settlement (RTGS) and CHAPS ISO 20022 schemas has been aligned to support global harmonisation.

The Policy Statement and Consultation is relevant to:

  • Payment Service Providers (PSPs) who are current or prospective CHAPS Direct Participants (DPs) or indirect participants.
  • Users who make, or are otherwise responsible or involved in, the initiating or processing of CHAPS payments.
  • Technology vendors who provide financial institutions or corporates with solutions for initiating, processing, or reconciling CHAPS payment messages.
  • Any other stakeholder, such as trade associations, industry groups and regulatory bodies with an interest in the future of UK payments.

Updates

The initial mandatory requirements were outlined by the BoE in its 2020 Policy Statement on Implementing ISO 20022 Enhanced Data in CHAPS, and its 2022 Additional Guidance on Detail on Mandating ISO 20022 Enhanced Data in CHAPS. As further implementation detail beyond the Additional Guidance has become available for CHAPS DPs through the Enhanced Data Working Group, the update reflects the outcome of the BoE’s ongoing international and market/participant dialogue since the initial publications, particularly for structured addresses (including new requirements for ‘hybrid’ structured addresses).

Following the move of Transition State 3 of the BoE’s RTGS Renewal Programme, the BoE will defer the mandated adoption of ISO 20022 enhanced data from November 2024 to 1 May 2025, in line with industry feedback for the need to maintain a sufficient time period between these two milestones. As the BoE has previously committed to providing 18 months of notice in advance of expanding its mandatory requirements for enhanced data, the Policy Statement will not expand its previously published mandatory requirements for enhanced data prior to the end of 2025.

The mandatory enhanced data requirements for 2025 and 2026 are as follows:

Purpose Codes and Legal Entity Identifiers (LEIs)

From 1 May 2025the BoE will mandate the:

a. Use of Purpose Codes for CHAPS payments between financial institutions, and for property transactions.

b. The inclusion of legal entity identifiers (LEIs) for CHAPS payments between financial institutions.

Structured Addresses

a. The BoE will continue to align with international standards, to enable ‘hybrid’ addresses from November 2025.

b. From November 2026, CHAPS payments containing fully unstructured addresses will be rejected by the CHAPS validation library, in line with international standards being updated at the same time. DPs therefore must structure addresses in hybrid form, at a minimum.

Structured Remittance

From November 2025, the BoE will mandate that where remittance information is included in a pacs.008, it must be structured.

All of the above enhanced data requirements for 2025 and 2026 are only mandatory for channels that are within the control of each DPs.

The Policy Statement also sets out the proposed policy positions from 2027 for consultation. The BoE is planning the following extensions of its mandatory requirements on enhanced data in CHAPS payments from November 2027:

  1. Including all initiation channels within the scope of enhanced data requirements from November 2027.
  2. Mandating the inclusion of Purpose Codes for all CHAPS payments from November 2027.

DPs should consider the actions required to meet these requirements from November 2027, engaging with vendors as appropriate.

Consultation

In chapter 6 of the Policy Statement and Consultation the BoE sets out certain proposals concerning:

  • Expanding the scope of mandatory requirements to all channels in November 2027.
  • Mandating the use of Purpose Codes for all CHAPS payments from November 2027.

The deadline for comments on these proposals is 28 June 2024.