Innocent customers have been left unable to send or receive money due to new transfer rules designed to block fraudulent transactions.
Mirror Money has heard from customers who have had their incoming payments flagged, simply because their names are ‘too long’.
In other cases, customers say they’ve received warning signs when transferring money, despite the recipient’s details being correct.
In one instance, a small business owner was unable to receive a payment because his name contained a hyphen the bank didn’t recgnise.
In another, the payee was told to proceed with caution because the recipient’s name contained more than 16 digits.
Until recently, you only had to enter the recipient’s account number and sort code to make a bank transfer.
This gave scammers free rein to masquerade as a trusted account holder and trick customers into transferring money.
However, banks now you to verify the name of the person or business you’re transferring money to before completing the transaction.
The safety measure – known as ‘confirmation of payee’ – was brought in to clamp down on push payment fraud, which cost the UK economy more than £455million last year.
In theory, it should be simple: If a customer enters the name of an individual or company as it appears on their bank account, a match – or a partial match – should be confirmed.
The trouble is, it’s so secure that some customers are unable to send money without receiving warning signs that tell them to proceed at their own risk.
Some systems don’t recognise spaces between initials, hyphenated surnames or ‘&’ symbols.
Some require a middle name or a title, even when they are not included on bank statements, others have a fixed character limit.
Mirror reader Adam told us he was left in a “ridiculous” situation, with his small business suffering because his name contained more than 16 characters.
He is one of dozens of readers to be questioned about their identity as a result of the new name-matching system.
He said when customers tried to send him money, they received warnings that he may not be legitimate, despite his details being correct.
“I bank with Santander Business and my account name is quite long and my customers were calling me to say they couldn’t pay me,” he explained.
“I called Santander Business and they told me that my customers had to type my account name exactly, but when I pointed out they only allowed 16 characters in that field, and my account name was much longer than 16 characters, it was totally new information for them.”
Santander later apologised to Adam, describing it as an “oversight”.
“I know other self-employed people were affected as their business account name is often their full name plus name of company which already amounts to 20 characters or more.
“I was still having problems with people trying to pay me after a week after I raised the issue with Santander. They then suggested that I change my account name to less than 16 characters.
The issue has since been resolved, but as a result, Adam had to change the name on his account and update his details with all of his payees.
James Newman is currently experiencing a similar issue with Starling Bank.
The electrician from London said the problem occurs when transferring money from Nationwide Building Society to Starling Bank.
“Every time I’ve tried to make a payment to Starling, I have received a warning telling me the account name is not recognised and that I should check before going ahead.”
He said each time he is advised to proceed with caution because the bank refuses to recognise him.
When he raised the issue with Starling, he was told that the bank is “fully operational within confirmation of payee”.
But James said he was “100% using the correct name for payments”.
James said the warning signs were also “very off putting” for his customers who became anxious about transferring money.
He said he’s now resorted to not using confirmation of payee when transferring to Starling Bank.
When Mirror Money put these concerns to Starling, the bank discovered it was in fact experiencing issues with confirmation of payee transactions.
It’s now launched a full investigation on the back of it.
“We have tested confirmation of payee from Nationwide to Starling Bank and there does seem to be an issue,” a spokesperson told Mirror Money.
“We are working hard on getting this fixed as soon as possible. We are very grateful to you and to your reader, our customer, for bringing this to our attention.
“Listening to customers is how we build a better bank. I would like to extend our apologies to the customer for the experience he had and for the incomplete information he received from our customer service team.”
Starling told us confirmation of payee is working well with most other banks.
It said in some small business cases, the payee must enter the name of the account holder, not their trading name to ensure the payment goes through.
Are you experiencing issues with confirmation of payee? Get in touch: [email protected]
Most high street banks say that, to use confirmation of payee, the name should be entered as it appears on the account.
Customers can choose to override a no-match message and continue, but they are warned that their money may not be recoverable if it ends up in the wrong account.
The retail payments authority, Pay.uk, who set the rules and standards for confirmation of payee, said it’s an important step to protect customers as authorised payment fraud.
“There is an industry-wide set of rules and standards for confirmation of payee, but, within these there is a degree of flexibility for individual banks to develop their own specific matching criteria,” a spokesperson said.
“This is to reflect the fact that different banks use different name formats. Cases of customers having issues are extremely low compared with the number of requests processed successfully.
“As best practice, customers should use the full first name (not initials) and last name, or the full name of the business, they are paying.”