This article was written by Sarah Kenshall.
It seems surprising, but banks do not automatically verify the name on the account to which the money transfers. Transfers are only validated by reference to a correct combination of sort code and account number.
This flaw has meant, in addition to accidental misdirection, criminals can pose as banks or solicitors and trick a person or organisation into sending money to a seemingly valid account (because the name appears to be correct). These are known as authorised push payment scams. The PSR sought to rectify this flaw by mandating (to begin with) that the six largest UK banks sign up to the Confirmation of Payee scheme, implemented and administered by Pay UK, by 31 March 2020. A number of other smaller banks have also volunteered to provide the service.
However, the PSR has announced that due to the banks having to manage COVID0-19 related risks, a number may be unable to fully implement Confirmation of Payee by the deadline. Given that it is very important to protect against authorised push payment scams, particularly now when businesses are having to adapt to new ways of working, the regulator has said that whilst it will not take formal action against banks that fail to meet the deadline until 30 June 2020, it 'expects the directed banks [i.e. the big six] to ensure customers who would have benefitted from the protections of Conformation of Payee are not otherwise disadvantaged from any COVID-19 related delay, including refunding victims of fraud if Confirmation of Payee would have prevented it from happening'.
This approach has been amplified by the consumer group, Which?.