On 7 October 2021, Pay.UK and the Bank of England (BoE) issued a joint consultation response on Purpose Codes in ISO 20022 payment messaging.
The joint consultation response summarises feedback received to the BoE’s and Pay.UK’s consultation on the draft UK Purpose Code list for the ISO 20022 payment messaging standard, and the BoE’s approach to implementing the recommended UK Purpose Code list in CHAPS. This approach expands on the BoE’s Policy Statement on Implementing ISO 20022 Enhanced Data in CHAPS with regards to the introduction of Purpose Codes. These are four letter codes which are carried across the payment chain, providing information to all users in the payments chain to indicate the reason a payment is being made.
In response to the feedback received to the earlier joint consultation, the BoE and Pay.UK have jointly developed the final recommended UK Purpose Code List (Annex B of the joint consultation response), and successfully applied for the new property and gambling Purpose Codes to be added to the ISO 20022 Repository (as part of the External Code Set).
All Purpose Codes in the international External Code Set will continue to be accepted in CHAPS and the New Payments Architecture, to maximise international compatibility. The BoE encourages use of the UK Purpose Code List for UK-originated CHAPS transactions; and participants should only use the wider External Code Set when there is a specific need to send a code with an overseas payment that is not on the UK list.
From spring 2024, the BoE will mandate the use of Purpose Codes for CHAPS payments between financial institutions and for property transactions.
In due course, the BoE intends to mandate the use of Purpose Codes at schema level, which will cause payments to be automatically rejected where mandatory enhanced data is incomplete or inaccurate. However, this is not expected to take place before 2026.