Banks to Start Requiring Account Names for Transfers to Combat Fraud


October 2018

Banks to Start Requiring Account Names for Transfers to Combat Fraud

New rules will see the name of someone receiving a payment become as important as their account and sort code when transferring money.

At the moment, the name given when making a transfer is not checked against the account. So-called advanced push payment (APP) fraud has been on the rise because of this vulnerability in the transfer system.

Fraudsters have used it to manipulate UK consumers out of £145m in the first half of 2018, and compensation is difficult to achieve as the customer has authorised the payment. “Authorised fraud”, as it is known, has been on the rise in the past decade.

Pay.UK, the UK’s payments operator, said that criminals “have become increasingly sophisticated in using this to trick people into sending money to the wrong account.”

The chief executive of the company said “sending a payment with an incorrect sort code or account number is like addressing a letter with the wrong postcode. Even if you have used the correct name it won't reach the intended destination.”

UK finance found that the most popular methods involved impersonating a well-known and trusted organisation or tricking people into paying ahead for services or products that aren’t real.

Similar dupes involved hacking into email accounts of legitimately employed builders or solicitors and then using the account to send emails requesting payments which then go into criminal accounts.

Gareth Shaw from the consumer group Which? said: “It’s right that banks and building societies have finally been forced to introduce this much-needed check at the point of transfer.

“While we await its introduction, it's crucial that an agreement is reached on the funding mechanism to reimburse all victims of bank transfer fraud who have been left out of pocket through no fault of their own.”

Consumer groups and regulators have long been pushing these relatively simple changes, with Shaw adding that ‘banks have dragged their heels’ in not implementing these changes fast enough to combat rising fraud levels.

Under the new "confirmation of payee" system, if you write the wrong name for an account holder you will be alerted that the details do not match and receive advice about contacting the person or organisation to which you are attempting to transfer your money.

You will be advised against proceeding with the payment unless the names are a perfect match, which does also mean that those who continue with a payment using incorrect account details will potentially struggle with compensation if it emerges that the transaction is fraudulent.

According to current plans both banks and building societies should have the system activated in July 2019, assuming that the technology is in place by April.

A spokesperson for payments watchdog, the Payment Systems Regulator said "this is an important step and we would like to see the banks implement this new protection as quickly as possible, giving everyone greater protection against fraud.”