The smartphone message going out to customers of Barclays is warm and friendly. “Coming soon,” it says, “when you pay someone new, you’ll be able to check the name on their account to help make sure you’re paying the right person.”
How lovely of the banks to be introducing such measures to protect us all. But the reality is that they have had to be cajoled, prodded and generally dragged into taking action. In the meantime, thousands of people have seen their financial lives shattered by frauds, or simple human error, that could so easily have been avoided.
I wrote a Guardian news story titled “Banks act to stop transfer scams and errors”, which detailed the radical change banks are taking to tackle “ballooning fraud” and “fat finger” problems.
There’s now one of those warning messages on the story: “This article is more than three years old”.
Three years on, the banks are saying the change is now going to take effect by the end of March this year. So what is this simple step that the banks were talking about three years ago, but which is still “coming soon”?
It is called “confirmation of payee” and means that if you owe me money, and I give you my account number, sort code and name, they will finally check that the three things match up.
The majority of bank customers have long been misled by the bit where you write in, or type in, the person’s name when making a transfer. It doesn’t matter what you put there. You can write Mickey Mouse and it makes not one jot of difference.
Similarly, if you get just one or two digits wrong on a sort code or account number, then without the name checking, your money can go catastrophically awry, as one Money reader found when he lost his £193,000 inheritance.
It has been a dream for fraudsters. In the worse cases, the crooks intercept an email between a house buyer and their solicitor. So let’s say your solicitor is Blodgett and Blodgett, and you get an email from them saying they’ve moved their account from Barclays to Lloyds, but the account you pay to is still called Blodgett and Blodgett.
It all looks completely authentic, and you send a payment to what you think is the solicitor, carefully writing in the Blodgett names.
In reality, the sort code and account name belong to the fraudster, and the bank never matches it against the Blodgetts’. That’s your life savings gone.
The banks have long argued that it’s more complicated than it first looks to confirm names. What if your account name is James McDonald, but everyone knows you as Jim? Should it reject a payment transfer if the sender uses the wrong one?
What’s more, it’s hardly worth one bank shelling out on an expensive IT upgrade to handle name confirmation, if the other banks aren’t also doing the same. It needs everyone to sing off the same name sheet.
That also tells you that the regulators have not been tough enough. Only they could have ordered it earlier.
Oddly, there was a blog on the Financial Conduct Authority’s website nearly two years ago, headlined “Why confirmation of payee can’t come soon enough”. Huh? So why are we still waiting?