Phase 1 CoP technical environment closes

Pay.UK, which owns the Confirmation of Payee (CoP) rules and operates the service, closed the Phase 1 technical environment on 30 June 2022, creating a single operating environment for CoP¹. The Payment Systems Regulator (PSR) had directed the closure under a variation to Specific Direction 11, known as SD11a¹.

CoP lets a payer check that the name on an account matches the details given when setting up a new payment¹. The PSR issued Specific Direction 10 in August 2019, requiring the six largest banking groups to deliver CoP; those banks covered around 90% of transactions made via Faster Payments and CHAPS at the time¹. A further 21 non-directed payment service providers (PSPs) voluntarily implemented CoP in Phase 1¹. In total, 59 PSPs now offer CoP¹.

The PSR said the closure followed work with Pay.UK and Phase 1 participants to let more firms join. In February 2022, under Specific Direction 11, it directed Phase 1 CoP participants to migrate to Phase 2 and directed Pay.UK to close the Phase 1 environment¹. SD11 required Phase 1 PSPs to send and respond to CoP requests in the Phase 2 environment only after 31 May 2022, and had the effect of revoking SD10 once Phase 1 closed; some Phase 1 PSPs faced technical challenges and delays with migration, and the PSR varied its direction to set the closure date at 30 June 2022¹.

The single environment means firms relying on different reference information, such as secondary reference data (SRD), can implement CoP¹. The PSR has separately directed around 400 PSPs to offer CoP to their customers, split into two groups¹:

The PSR said prioritising Group 1 would increase CoP coverage from 92% of Faster Payments transactions to 99% after October 2023¹. It removed seven PSPs from Group 1 that had delivered CoP since its consultation, leaving 32 PSPs directed under Group 1¹. It also said 26 PSPs had voluntarily adopted CoP since it directed the closure of the Phase 1 environment¹.

Why it matters for households

CoP is the check that tells a payer whether the name they have entered matches the account they are paying. Until 30 June 2022, firms that had joined in Phase 1 used a technical environment that not all other providers could use¹. With one environment and one set of rules, providers that identify customers using reference information other than sort codes and account numbers, including building societies using SRD, can now connect¹.

For households, the practical effect is who is covered and when. The PSR's direction covers around 400 PSPs, with Group 1 firms required to have send and respond capability after 31 October 2023 and Group 2 firms after 31 October 2024¹. The PSR said the Group 1 timetable would lift CoP coverage from 92% to 99% of Faster Payments transactions after October 2023¹. The PSR's stated aim is to reduce authorised push payment (APP) fraud, where someone is tricked into paying an account controlled by a fraudster, and accidentally misdirected payments¹. It cited some evidence that CoP has helped curtail the increase in some types of APP scams, some evidence of reduced fraudulent funds received into accounts by PSPs that have implemented CoP, and a reduction in accidentally misdirected payments¹.

The PSR also said it was concerned that many consumers remain unprotected, that fraud received by PSPs not offering CoP has continued to rise, and that PSPs have been slow to implement CoP¹.

What happens next

The PSR said it will ask directed PSPs to submit data during spring 2023 and will publish the first set of data in summer 2023¹. It also said it had recently published a consultation on a proposal to require all PSPs sending payments over Faster Payments to fully reimburse APP scam victims, with only limited exceptions¹. The PSR's consultation on the draft direction ran for six weeks, closing on 8 July, and received 52 responses¹.