United Kingdom (and EU regulation)

PSR finalises plans for the wider implementation of fraud prevention tool, Confirmation of Payee

By Albert Weatherill (UK) and Simon Lovegrove (UK) on February 11, 2022 Posted in Payment Services, United Kingdom

On 10 February 2022, the Payment Systems Regulator (PSR) confirmed and published a new rule that paves the way for more banks and building societies to adopt Confirmation of Payee (CoP), the bank account name checking service.

In 2019, the PSR directed the UK’s six biggest banking groups to implement the first stage of CoP – a fraud prevention tool that checks the names, account numbers and sort codes when payments are made from one account to another.

At the end of 2021, the PSR set out its proposed plans for the service to be rolled out to institutions that rely on different reference information, which would see more financial institutions able to offer CoP to their customers when making payments. This would require ending the dual running of two technical environments to ensure that transactions between existing CoP participants and new joiners are interoperable.

The PSR’s decision will make sure that the technical and system requirements for Phase 2 will be implemented by 31 May 2022.

The PSR has given a direction that:

requires Pay.UK to terminate the terms and conditions for participating in Phase 1, withdraw each payment service provider (PSP) CoP Phase 1 accreditation, and retire the Phase 1 rules and standards on 31 May 2022;
requires Pay.UK to notify the Open Banking Implementation Entity (OBIE) of this action, so the OBIE can close the Phase 1 technical environment;
requires Phase 1 PSPs to only use the Phase 2 technical for the CoP service after 31 May 2022;
requires relevant PSPs to regularly report to Pay.UK on their progress migrating CoP traffic to the Phase 2 Open Banking environment by 1 May 2022, and requires Pay.UK to pass this information to the PSR;
requires relevant PSPs to undergo enhanced reporting to both Pay.UK and the PSR if the PSR considers they are at significant risk of failing to migrate by 1 May 2022, with an obligation to implement a remediation plan agreed with the PSR;
revokes Specific Direction 10 on 31 May 2022.

The direction will came into effect 11 February 2022.