Transferring money from your bank account to friends, family and other payees is going to change slightly from the end of this month, as part of new anti-fraud safety measures.
Six major UK banks are to introduce new rules in an effort to prevent fraudsters duping people into sending money to scam accounts.
How are bank transfers changing?
Currently, when making a bank transfer, you are required to provide details of the recipient’s account number and sort code.
While you can also include details of the recipient’s name as well, banks do not have to verify this information. This can allow fraudsters to pose as someone else and easily dupe people into sending money to a fake account.
The current system also means that, if an error is made when typing in the account number, the money could easily be sent to the wrong person, as no additional verification checks are in place.
However, from 30 June, you will be able to ask banks to conduct a name check for you before you send out any money.
What checks will be made?
Banks will check that the name on an account matches the name of the person you are sending money to. In the event the names do not match up, banks will notify you before any money is transferred, and you can stop the payment.
If you used the right account name, you will receive confirmation that the details match and can proceed with the payment.
If you used a similar name to the account holder, you will be told the actual name of the account holder to check. You can then update the information and try making the transfer again, or contact the intended recipient to check their details.
Should you be transferring money via a phone payment, you will be informed whether the details match during the call, while online transfers will issue a ‘yes, match’ notification.
However, the new system will only work if both banks you are dealing with are registered, and it will not apply to international payments.
‘Confirmation of payee’
The new system for bank transfers, known as ‘confirmation of payee’, was first introduced in October 2018 and will become law in the UK on 30 June.
Barclays, HSBC and Lloyds are among the banks that will soon start to conduct name checks when money is being sent to third party accounts.
Halifax, First Direct, RBS and NatWest have already introduced the anti-fraud measures, while Nationwide and Santander both plan to have the new system in place by 30 June. TSB also said it will follow suit, and introduce the scheme by October 2020.
The move marks efforts to combat fraud that costs the UK more than £130 billion per year.
The new rules coming into effect in June will also apply to faster payments and Clearing House Automated Payment System (CHAPS). Bacs payments, which are typically used by employers to pay their staff, will be added later in the year.