Banks finally introduce 'Confirmation of Payee' – to tell you if you’re paying the right person

Before June, if you made a payment, it usually didn't matter if you used the name 'Mickey Mouse' – the transfer would go to the sort code and account number you put in. That meant fraudsters were easily able to pose as someone else and trick you into sending them money. It was also easy to mistype account details and send money to the wrong place. 

But many banks have now introduced the long-overdue 'Confirmation of Payee' scheme, originally announced in October 2018. The scheme means you can check whether the name you've been given matches the name associated with the account number and sort code you're paying, and decide not to make the payment if necessary (so the onus is still on you to ensure you're happy before completing the transfer).

Some banks have introduced this and some haven't, but it requires the sending AND receiving bank to have the system in place for you to get the real benefit of it.

The six major banking groups – Barclays, HSBC (including First Direct), Lloyds (including Halifax and Bank of Scotland), Nationwide, RBS (including NatWest and Ulster) and Santander – had until Tuesday 30 June to implement it for Faster Payments and Chaps payments under Payment Systems Regulator rules. Other banks didn't have a deadline, and have a choice whether they want to roll this out to their customers or not.  

For more info on preventing fraud, see our Stop Scams guide or Best Bank Accounts for a round-up of our top-pick accounts.

Which types of transfers will Confirmation of Payee work on?

Of course, as we say above, the sending and receiving banks need to have the system in place for it to work properly. If they do, then with the big six banking groups at least, it applies if you're paying using:

• Faster Payments – this is the most common transfer type. Payments take up to two hours to arrive, and banks usually let you send sums up to £10,000. 

• Chaps payments – these tend to be used to transfer big lump sums, eg, for a house purchase. 

Banks will work on launching it for Bacs payments in the coming months and years, but there's no deadline for this yet. Bacs payments are normally used for direct debits or by companies to pay your salary, so it's rare you'd use them yourself.

Confirmation of Payee isn't being implemented for international transfers as that would require co-operation between countries and banks to open their systems to each other for the checks, which'd be very difficult to implement.

Is my bank offering Confirmation of Payee yet?

As we explain above, the big six banking groups had until the end of June to do this for Chaps and Faster Payments. Here's a table detailing what they and the other banks told us – we'll add more information as more banks roll it out. The ones that had to implement it are bolded – it's voluntary for the others:

What info do I need to give to use Confirmation of Payee?

For Confirmation of Payee to work, your and the recipient's banks will need to be using it. When setting up or amending a payee, you need to give the following details:

• Name of payee. The person or business you're sending money to. For Confirmation of Payee, this needs to be the exact name registered to the account (you only need one of the names if it's a joint account). Be aware that if you're sending money to a business, it may use different trading names – double-check if you're unsure.

• Sort code.

• Account number.

• Payment reference. For example, your card or account number if paying a company, or 'cinema' for example if paying a friend.

• Type of account. This is new under Confirmation of Payee; you need to say whether the account you're paying is a personal or business account.

Your bank will then check the records of the payee's bank to see if the name matches.

What results could I get from it?

After the Confirmation of Payee check, your bank will give one of four results. If you're doing a phone payment, you'll be told whether it's a match or not. Online, you'll see the different results (Lloyds Banking Group has kindly shared some images of results you might get):

• 'Yes, match'. The bank will confirm that the name and details are a match, and you can continue with the payment.

• 'No, close match'. If you've used a similar name to the correct account holder – for example, if you spelled their name wrong or used a nickname by mistake – the bank will tell you the actual name of the account holder. You can then confirm that the name is correct and continue with the payment, or cancel the payment and contact the payee to check their details.

  In the example below, you might see this if you'd entered Han or Hazan as the payee's first name, rather than the correct Hayan.

• 'No, the name is wrong'. If the name you've entered isn't close to matching the account details, you'll be advised to cancel the payment and contact the payee. You won't be shown the actual name on the account. You can still choose to continue with the payment, but you'll be warned that this is at your own risk.

• 'Confirmation of Payee is unavailable'. This could be, for example, because the bank you're trying to send the payment to doesn't have Confirmation of Payee set up, or the account you've entered doesn't exist. Either way, it's worth checking the account name and details with the person you're paying, to make sure you've got them right.

What should I do if the name doesn't match?

If the name doesn't match, you should stop making the payment. Double-check the sort code and account number you've entered, in case you've mistyped a digit.

You should then go back to the person you're paying and check the details with them. If you're paying a company, it's worth confirming the account details by an alternative method, such as a published phone number or official website – as opposed to any details given to you by text or on the phone.

If you think that you're being scammed, stop communicating with the fraudster straightaway and report it to the police through Action Fraud.