Bank Account Verification

A small number of investors in our Community Shares Offer have been in touch to let us know that when making their payment they’ve been alerted by their bank that our account “can’t be verified” or words to that effect. In somer instances we understand that their bank has informed them that if they proceed with the payment they do so at their own risk.

Clearly we were concerned to receive these reports, having taken great care to set things in place to enable our Share Offer to run as smoothly as possible. A bit of research quickly revealed the culprit: “Confirmation of Payee”.

Confirmation of Payee is a new system that is being implemented by the banks such that when you make a first payment from your account to a new payee, your bank cleverly checks with the payee’s bank in the background to check that the details you’ve given (sort code, account number, etc.) actually match up with the name of the payee. In theory it’s a great service, and we’re sure that it will help to reduce banking fraud, which seems to be on the increase.

The challenge with Confirmation of Payee is to ensure that it works right across the banking industry. Clearly it is only going to be of value if all of the banks participate, otherwise people will see warning messages pop up whenever they try to make a first payment to any new payee whose bank isn’t participating in the scheme, which wouldn’t be at all helpful, right?

Right. So it comes as something of a surprise when we learned from our research that the Payment Systems Regulator, the organisation charged with implementation of Confirmation of Payee, directed only some of the banks (Barclays, HSBC including First Direct, Lloyds Banking Group, Nationwide Building Society, Royal Bank of Scotland Group and Santander UK – known collectively as the big six, because between them they control as many as 90% of bank accounts) to implement the system by June 30th.

This of course means that many customers of smaller banks and building societies, including ourselves (we chose to bank with the Co-operative Bank, not one of the big six) are effectively left out in the cold.

So, if you have tried to make a payment to us in recent days for your shares, and have been confronted with a warning or alert message, this is why. It’s not because we’re some spurious fly-by-night outfit, it’s not because there’s anything out of line with our bank or our account there. No, it’s because the banking industry and the regulator have acted – pretty outrageously in our view – to create what is effectively a two-tier banking system.

Iff you have any concerns about making a payment to us, please don’t hesitate to get in touch.