The Payments Council has published a new code of best practice for payment service providers (PSPs) on misdirected payments along with guidance on the code, which should be read in conjunction with one another. The code is voluntary and currently has a limited number of signatories although it is anticipated that this may increase. A misdirected payment is an electronic payment made by mistake to the wrong account, usually due to a customer entering the wrong payment information. The code is designed to prevent misdirected payments and increase transparency surrounding them.
The code and guidance set out a recovery framework for banks or building societies to follow once they have been informed by a customer of a mistaken payment. From May 2014, customers of subscribers can rely on the code in relation to UK PSPs that offer payment methods such as BACS, CHAPs and Faster Payments. The framework includes:
- a commitment by the bank or building society to take action within two working days of being notified of the mistaken payment;
- prescribed time periods within which the customer should be updated on developments if it is not possible to reclaim funds immediately;
- the provision of clear and accurate information on customers’ options where funds cannot be recovered (such as through court action); and
- banks and building societies agree to design online, mobile and telephone payment methods that will reduce the risk of mistakes.
The Payments Council will monitor this code and will track the customers using the code. It also has a website that provides details of how a UK PSP can sign up to the code, as well as information for consumers on what they can expect from the code.
View Code of best practice: misdirected payments for payment service providers, 24 April 2014
View Guidance on the code of best practice: misdirected payments for payment service providers, 24 April 2014
View Payments Council website, 24 April 2014
View Current subscribers to the code, 24 April 2014
View Code of best practice: misdirected payments for payment service providers, 24 April 2014
View Pay your way: misdirected payments, 24 April 2014
