Skip links

CP22/2 – PSR CoP Consultation for UK-wide Rollout

Background of CP22/2

Confirmation of Payee is a name checking service for UK-based payments which Pay.UK launched in 2020 and which has now been successfully implemented by more than 30 UK banks. It has also been recently awarded the “Consumer Anti-Fraud Solution of the Year” by the most recent Payment Awards 2021 and recognised as the category winner under the “Best Industry Innovation” category by The Card & Payments Awards 2022. 

The Payments Service Regulator (PSR) has arrived at the following conclusions after analysis of CoP results and anecdotal evidence of existing CoP participants: 

  • It has helped to curtail the increase in some types of Authorised Push Payment (APP) fraud
  • It has reduced levels of fraudulent funds received into accounts by PSPs that have implemented CoP  
  • It has reduced the accidentally misdirected payments being made to the wrong person/account as CoP has been rolled out 

Encouraged by the positive impact of the Confirmation of Payee (CoP) implementation by the PSPs that are covered by the earlier directions (SD-10 & SD-11), the Payment Systems Regulator (PSR) has published a Consultation paper (CP22/2) in the last week of May 2022 and this is of specific importance for all Payment Service Providers (PSP) that have not implemented the Confirmation of Payee (CoP) solution yet 

Scope and impact of CP22/2

The scope of this CP22/2 includes the draft specific regulatory direction that requires around 400 PSPs (who have not implemented CoP yet) to implement a system that offers CoP to their customers in a staggered manner over the next 24 months. By doing so, the PSR expects to increase the CoP coverage from 92% of Faster Payments transactions to 99%. The Draft Specific Direction (SD-X) is also included as an Annex in the Consultation paper. 

Here are some key excerpts from the Draft SD: 

  • “The PSR’s objective is to see more PSPs adopt CoP, so that a greater number of CHAPS and Faster Payments users benefit from it” 
  • “The PSPs listed in the Schedule must have the system in place from 30 June 2023 and the Group 2 PSPs from 30 June 2024” (NOTE: The schedule includes the names of 46 PSPs) 

So, if you are one among the 46 PSPs listed in the schedule OR a PSP either using unique sort codes, or a building society using a SRD reference type, the CP-22 and the draft regulation included in the CP-22 impacts you 

Next Steps for the impacted PSPs

In our opinion, all PSPs must implement the CoP solution asap irrespective of the CP22/2 and the Specific Direction (SD-X) that is expected to follow soon because there is sufficient evidence that the APP fraudsters are moving away from the Banks that have implemented CoP and started to target the Banks that have not implemented CoP. So, in order to protect your customers from APP frauds and safeguard your brand image, you must no longer delay the implementation of CoP 

(NOTE: if you are PSP with a unique business model that doesn’t require implementation of CoP, you can respond to the above CP within the stipulated time explaining your business model and seek an exemption from CoP implementation) 

Smaller banks and building societies may face a dilemma with regards to implementation of CoP due to the following reasons: 

  • Low Volume of Transactions
  • Larger impact to the IT system user interfaces serving multiple channels (Mobile App, Browser based Net Banking, Telebanking, Branch Walk-ins and etc.,) 
  • Lack of technical knowledge and resources for the CoP implementation 
  • Change management implementation required to manage the business process changes resulting from CoP implementation 

At the moment, CoP is currently offered as a SaaS solution by reliable and established vendors like Banfico whose solution can address the above concerns of smaller banks and building societies. In addition to providing the SaaS solution, we also support our clients in all phases of the solution integration process starting from the business case development till change management. 

Also, by partnering with a reliable vendor like Banfico, the Banks and Building societies can transfer the entire implementation risks and challenges to the vendor and focus on their core business operations. 

How can Banfico help?

Banfico’s CoP solution can assist in the battle against Fraud. We ensure that businesses and personal customers have greater assurances that they are sending payments to their intended recipient, whilst providing another layer of protection in the fight against APP fraud. Our cost-effective SaaS solution is delivered in its entirety, which includes core banking integration support for meeting all pay.UK conformance tests. 

To find out more about the CoP solution, visit the Banfico website or contact us directly to request a demo and learn more about our solutions.