Making faster payments safer
Digital banking services undoubtedly provide customers with powerful tools to manage and move their money, but as the recent rise in Authorised Push Payment (APP) fraud shows, greater payment security measures are needed. Magnus Falk, Senior Adviser for Technology and Innovation at the FCA, looks at the work currently underway to make faster payments safer in his latest FCA Insight article.
The Faster Payments scheme enables transfer of money to other accounts to clear within two hours, simply by entering the sort code and account number of the receiving account. Although an account name also has to be provided, this is not verified by either the sending or receiving institution. The rise in APP fraud suggests that more needs to be done to improve the security of these payments.
Confirmation of Payee, which already exists for some types of payments such as PayM, is one security feature that would go some way to improve the situation. Thanks to the Open Banking framework, this type of interaction between banks is relatively straightforward to implement.
The Payment System Regulator (PSR) is driving this initiative to ensure adequate protection for users of these new payment tools. Originally, the Payment System Strategy set the deadline for implementing Confirmation of Payee at 2021, but this has been brought forward as part of a new code of conduct to the beginning of 2019. After this date, banks will be required to seek and evidence Confirmation of Payee, otherwise they will be liable for any loss incurred.
‘Dear CEO’ letter issued on irredeemable preference shares
The FCA is currently undertaking a review of the market for fixed income shares, particularly those described in a way that suggests permanence, e.g. perpetual or irredeemable. This is to ensure that investors have the information required to make informed decisions about the risks and rewards associated with these shares.
Following recent market activity, Andrew Bailey has issued a ‘Dear CEO’ letter to all firms involved in the sale of irredeemable preference shares and other similar capital instruments.
Firms need to consider whether the decision to cancel or retire a class of irredeemable shares, at a price that is not based on the current market rate, would constitute inside information under Article 7 of the Market Abuse Regulation (MAR). If so, inside information must be disclosed as soon as possible, unless there are reasonable grounds for delaying the release of the information.
Andrew Bailey also took the opportunity to remind firms of the information they may wish to make readily accessible to all shareholders and potential shareholders, including:
- The original terms and conditions, or similar documentation provided at the time of the offer;
- Any changes to documentation which has occurred following the issue of the shares;
- The articles of association for the issuer of the securities; and
- A Q&A, or similar document, which sets out how the rights attached to the shares can be amended by the issuer, including any ability to cancel the shares at less than market price without the agreement of the shareholder.
FCA publishes complaints data for H2 2017
The FCA has published complaints data for H2 2017, which shows that total complaints increased by 13% in comparison to the first half of the year. A total of 3.76 million complaints were received in the second half of 2017, an increase of 427,032.
Figures show that Payment Protection Insurance (PPI) was the main driver for the increased number of complaints, which reached its highest level in more than four years. This coincided with the launch of the FCA’s campaign in August 2017 to raise awareness of the forthcoming PPI complaints deadline. The total amount of redress paid for PPI complaints for the half-year stands at £2.05 billion, an increase of 19%. However, the average payment amount has fallen compared to H1.
Excluding PPI, firms received 13,000 fewer complaints in H2 2017 compared to H1.
56% of all complaints were closed within three business days, which remains unchanged from the first half of the year.