General directions for the implementation of Confirmation of CP18/4 Responses Payee: Responses to consultation Contents Anonymous 1 4 Anonymous 2 8 Association of Independent Risk & Fraud Advisors (AIRFA) 14 The Association of Corporate Treasurers 31 Atom Bank 36 Bank of America Merrill Lynch 46 Barclays 48 British Retail Consortium (BRC) 61 Building Societies Association (BSA) 63 CashFlows 71 CBI 75 Clydesdale Bank PLC 79 Dudley Building Society 82 Electronic Money Association (EMA) 84 Emerging Payments Association (EPA) 95 Experian 100 HSBC Bank PLC 107 HSBC UK Bank PLC 112 Information Commissioner’s Office 130 Industrial Bank of Korea 132 Link Asset Services 135 Lloyds Banking Group PLC 140 Member of the public 151 National Trading Standards (NTS) 153 National Westminster Bank PLC 157 Nationwide Building Society 168 Open Banking Implementation Entity 177 Ordo 184 Santander UK, plc 191 Payment Systems Regulator May 2019 General directions for the implementation of Confirmation of CP18/4 Responses Payee: Responses to consultation Secure Trust Bank 195 Societe Generale 201 SWIFT 207 Transpact 211 TSB Ltd 216 UK Finance 233 Ursa Finance 242 Virgin Money 246 Visa 250 Which? 257 WorldFirst 263 Worldpay 265 Yorkshire Building Society 267 Names of individuals and information that may indirectly identify individuals have been redacted. Payment Systems Regulator May 2019 General directions for the implementation of Confirmation of CP18/4 Responses Payee: Responses to consultation Anonymous 1 Payment Systems Regulator May 2019 4 PSR Questionnaire Question 1: Is giving directions under section 54 of FSBRA to PSPs requiring them to introduce CoP the right approach to securing our objectives, in particular to reduce significantly losses and harm from APP scams and accidentally misdirected payments as soon as possible? Are there other approaches that would lead to the same outcomes that we should consider, and, if so, what are they? Do you have any other comments on the issues raised above? Answer: We agree that this is one approach but seems complex and difficult to implement in the time frame. Another way would be to implement a process whereby the receiving bank checks the name and the account number match prior to the credit being processed. Question 2: Assuming directions in respect of FPS and CHAPS are given, are there any types of PSP that should not be given the directions? What is the basis for your view, particularly having regard to the likelihood of achieving the benefits of CoP? Answer: Directions should be directed at the participants (member banks) of CHAPS & Faster Payments. Considering the proposed process covers 24/7, 365 days a year it would not be possible for an agency bank like us to implement in the time frame suggested. Currently our systems are open Monday to Friday between 8.00 & 18.00. Question3: Should the same PSPs be subject to a requirement to respond to a CoP request as those that are required to send a request? Answer: Yes the participants (member banks) should be subject to a requirement to respond to a CoP request as those that are required to send a request. A Partial solution should be designed for agency banks because of the different business hours they have. Question 4: Do you think that we should consider giving directions in relation both to FPS and CHAPS transactions? If you believe that we should consider giving directions in relation to only one of these payment systems, or more than FPS and CHAPS, please set out why. Are there any other issues that we should consider when deciding which payment systems should be in scope? Answer: Makes sense to offer directions for both FPS and CHAPS, but in our view BACS should also be included. Question 5: Should the directions apply to all payment channels that an FPS or CHAPS payment can be initiated from? Should a CoP request only apply when a new payment mandate is being set up or changed? Answer: If CoP is implemented it makes sense to all payment channels but consideration should be made for agency banks. Question 6: How should any directions deal with the potential for people to opt out of the CoP process? Answer: The idea of CoP is to reduce the amount of fraud in the market why would you want anyone to opt out as long as confidentiality is guaranteed. Question 7: Should any directions cover the sending of money from both individual and business accounts? Answer: We believe it should. We only hold business accounts but this is definitely an issue which has affected our customers. 5 Question 8: Should the directions separate out responding to CoP requests from being able to send CoP requests? Should directions cover both sending and responding? Should directions cover both sending and responding? Answer A: Yes, but different rules should apply to different types of PSP’s Answer B: Yes both sending and responding should be covered. Question 9: Do you agree with the deadlines for the introduction of CoP? If you do not agree, please set out why you consider different dates would be more appropriate and your view of the impact that would have on the costs and benefits of CoP. If the dates are not considered achievable, please give reasons and alternative dates that you consider achievable and the reasons why. Answer: Based on what we see the following conclusion/restrictions: • Currently we see no obligation to offer the service by regulatory requirement. If a receiving bank does not offer Confirmation of Payee then the paying customer will be advised that the recipient (or payee’s) account name is unable to be checked. However, we understand that the PSR might be considering regulatory intervention to ensure that PSPs implement CoP in a timely and coordinated way. • Our payment infrastructure of foreign branches is not 24/7/365 ready, which means that implementation is very critical from IT architecture point of view. • Implementation costs are not known but expected to be very high due to infrastructure dependencies. • We do not have any technical specifications regarding the new service; a detailed assessment is therefore very difficult. Especially when it comes to the infrastructural topics, matching algorithms, connectivity and interfaces. • Targeted start dates are totally unrealistic even if other restrictions would not apply. As far as the consultation paper is concerned, we see difficulties in answering the questions correctly and effectively. It should be pointed out that the deadlines set (for consultation as well as for implementation) cannot be reached. Question 10: Are there any alternative approaches that we should consider instead of giving directions to PSPs as set out in this document? Answer A: Validation of account name and number for incoming payments prior to the credit being booked. Answer B: A centralised database could be created for all account number and sort codes for all PSPs. Question 11: Is our assessment of the benefits the right one? If you do not agree, please set out what you consider would be more appropriate and your view of the impact that would have. Answer: Unable to assess without further analysis Question 12: Is our assessment of the costs the right one? If you do not agree, please set out what you consider would be more appropriate and your view of the impact that would have. Answer: Unable to assess without further analysis Question 13: Is our assessment of the trade-off between costs and benefits the right one? If you do not agree, please set out what you consider would be more appropriate and your view of the impact that would have. Answer: Unable to assess without further analysis 6 Question 14: What is your view on the impact of the proposed dates in our approach to the trade-off between costs and benefits. Do you consider that imposing April and July deadlines impacts either the costs or benefits of implementing CoP relative to a later implementation date – for example, 2020 or later? Answer: We only have corporate clients and further analysis would be needed regarding costs, benefits and deadline for the implementation. Question 15: Do you have any comments on our assessment of the impacts of the directions we are considering on protected groups or vulnerable consumers? Do you have any evidence that will assist the PSR in considering equality issues, and in particular complying with its public equality duty, in deciding whether to give directions and considering alternatives? Answer: We do not deal with protected groups or vulnerable consumers as the bank only hold accounts for corporate clients. 7 General directions for the implementation of Confirmation of CP18/4 Responses Payee: Responses to consultation Anonymous 2 Payment Systems Regulator May 2019 8 Confirmation of Payee Consultation Payment Systems Regulator 12 Endeavour Square London E20 1JN 7 January 2019 CONSULTATION ON GENERAL DIRECTIONS ON IMPLMEMENTING CONFIRMATION OF PAYEE Thank you for the opportunity to respond to the Confirmation of Payee consultation and for agreeing to extend our response date to 7 January 2019. is supportive of initiatives to protect customers from APP fraud and misdirected payments. We are already pro-active in educating our customers about the threat of fraud and in working to reduce overall fraud levels (through work including our recent fraud awareness customer campaign and our involvement in an industry pilot on mule accounts). We recognise how Confirmation of Payee (‘CoP’) will help address some, but not all, of the challenges the industry currently face around APP scams. The key challenges as we see them are: - We agree CoP should be implemented as soon as possible for the benefit of both consumers and the industry; however, we feel the proposed timeframes pose significant challenges for given the scale of change required and would place a more onerous burden on smaller institutions like our own to deliver.