PSR directs around 400 more financial firms to provide CoP

The Payment Systems Regulator (PSR) directed around 400 more financial firms to provide Confirmation of Payee (CoP), following a consultation in May 2022¹. The regulator said this would see nearly all transactions made via Faster Payments and CHAPS covered by CoP by October 2024¹.

CoP lets banks check the name on a new payee's account as well as the sort code and account number¹. Alerts tell the payer whether there has been a match, a close match, or no match, so corrections can be made before the payment is sent¹. The service is designed to prevent misdirected payments as well as fraudulent ones¹.

The direction sets two deadlines. Firms named as Group 1 payment service providers (PSPs) in Specific Direction 17 had to implement CoP by 31 October 2023¹. Group 2 PSPs must implement it by 31 October 2024¹. The PSR said firms fall into Group 2 if they have their own unique sort code, are a building society, send funds for their customers over CHAPS or Faster Payments, and have accounts that consumers and businesses can make and receive payments from¹. The regulator published a non-exhaustive list of PSPs that were on the Extended Industry Sort Code Directory (EISCD) at the beginning of 2022 as a starting point for firms working out whether they are covered¹.

The expansion follows earlier phases. In August 2019 the PSR gave members of the UK's six largest banking groups Specific Direction 10 to implement CoP by the end of March 2020¹. The PSPs subject to that direction are involved in around 90% of Faster Payments and CHAPS transactions¹. In July 2020 the regulator confirmed that the directed PSPs had achieved widespread implementation of CoP, with certain agreed exemptions¹. In February 2022 it issued a direction to ensure the transition of CoP to a single technical environment (phase 2), allowing more banks to offer the service¹.

Why it matters for households

CoP is the check that runs when someone sets up a new payee or changes the details of an existing one. Under the service, the payer is told whether the name they entered matches the name on the account, is a close match, or does not match at all, so a mistake can be caught before money leaves the account¹. That covers both payments sent to the wrong account by accident and payments pushed through by a fraudster.

The practical effect of the direction is that customers of the roughly 400 additional firms brought in by the May 2022 consultation gain the same check at the point of payment, rather than only customers of the largest banking groups. The PSR says the combined effect is that nearly all Faster Payments and CHAPS transactions will be covered by CoP by October 2024¹. Until a customer's own bank or building society implements the service, that customer does not receive the name-check alerts on payments they send, even where the receiving firm is covered.

The deadlines are set by group rather than by individual firm, so the date a particular customer sees the change depends on which group their provider falls into: 31 October 2023 for Group 1 PSPs named in Specific Direction 17, and 31 October 2024 for Group 2 PSPs¹. The PSR has not reported, in this material, how many firms have implemented CoP to date under the extended direction, or what happens to a firm that misses its deadline.

What happens next

The remaining deadline in the direction is 31 October 2024, by which Group 2 PSPs must implement CoP¹. The PSR has published the Group 2 list and the requirements under Specific Direction 17 for firms to check their position¹. Further detail on how the regulator oversees payment firms is set out in its regulation and policy coverage.