The Payments System Regulator (PSR) has confirmed the widespread implementation of its new fraud-prevention tool, Confirmation of Payee (CoP).

The name-checking system has been adopted by members of the UK’s six largest banking groups, and the PSR suggested that customers wanting to make a payment will now have “much more certainty” that their money is being sent to the right person.

CoP means the members of these six banking groups can check the name on a payee’s account against a sort code and account number, and that customers setting up a new payee will now be able to confirm that the name they’ve entered matches the one on the account they’re intending to pay. This helps to prevent payments going to the wrong account, whether accidentally or due to fraudsters.

The tool marks a significant milestone in reducing Authorised Push Payment (APP) scams, the PSR stated, adding that the new service is designed to reduce fraud and accidentally misdirected payments.

The banking groups to adopt the system include Barclays, HSBC, Lloyds, National Westminster, Nationwide Building Society, Royal Bank of Scotland, Santander UK and Ulster Bank Limited

PSR managing director, Chris Hemsley, said: “The widespread implementation of this additional name-checking provides a new, added layer of protection for consumers. As well as helping stop fraudsters from committing devastating crimes, it will also help people avoid paying the wrong person accidentally.

“We’re pleased to have reached this significant point, and I welcome the work that the directed banks and building societies have put in to reach this point. Their customers can now make payments with greater assurance that their money is going to the person they intended.”

Responding to the PSR’s confirmation, Mitek head of strategy, Joe Bloemendaal, commented: “The new CoP rule coming into force is a step forward in the fight against financial fraud. Fraud has skyrocketed during the coronavirus pandemic, so every additional layer of protection the banks introduce should be welcomed – especially if it can save the British public £145m a year in fraud losses.”

The cybersecurity technology provider, however, also warned that the new rule “doesn’t go far enough” to put fraudsters off.

“The new rule means banks will have to verify the name of the person we send money to with every new transaction. They will flag if names don’t match, suggesting there may be a fraudster behind a bank account – but they will not block the transaction,” Bloemendaal added.

“For a more watertight anti-fraud solution, banks should adopt more thorough identity verification of every new account owner at the onboarding stage.

“Digital identity verification technologies can do this in minutes on a mobile, as new customers take a selfie and a photo of their ID document. Anti-forgery AI checks the ID document is legitimate, and liveness detection checks the selfie is really being taken by the account opener. Then, machine learning algorithms verify the two against each other. If necessary, human experts can step in, adding an additional layer of verification.
 
“This makes it easier for banks to stop fraudulent accounts ever being opened. This is what the banks should really be working towards, if we are ever going to stop fraudsters in their tracks.”

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