Comedy situation of the week: The Government is going to take responsibility for the bank payments system away from the UK Payments Council. It will give it to a new organisation within the Financial Conduct Authority.
Should we care? If you use a card to pay for things, or you transfer money between accounts, you’ll be using this system. You might care if you want to pay less for the privilege. It could also be simpler and safer. You could soon be able to pay bills by text message.
The system is controlled by the Payments Council, which is owned by the big banks. That way they can avoid the embarrassment of having an outsider come in and show them how to do things properly.
The Government wants to break that strangle-hold. Will the change make it any better?
What do you think?
The FCA has failed to force the banks to clean up their act. Something must be done. Brainwave! Instead of failing to do it via the Payments Council, re-organise things so that the FCA can fail to do it more directly. Efficiency, and a public relations coup, all rolled into one.
It will be interesting to see how the FCA will go about its task.
Most comment has centred on the fact that this change will open up the market to competition. This is a good thing, but there is another opportunity here that the FCA should take.
The banks have failed to address the increasing problems of money-laundering and fraud. Some of them have made no attempt at all. This makes accounts at those banks very attractive to criminals. The laxity of these bank’s payment systems has the bonus effect of making it easier for crooks to rob more law-abiding customers, or ‘cash-cows’ as the banks prefer to think of them.
The FCA could compel the banks to make cheap and simple changes to their systems that would make it impossible to pay a large sum of money into a bank account and immediately transfer it out again. This minor change would cut the leakage of money from bank accounts by millions.
in a similar vein, we’re all familiar with the dangers of online funds transfers. If you’re lucky, your bank will have pre-warned you to take the greatest care that you’ve entered the correct amount and that the sort-code and account number are exact. If not, and it all goes into the wrong account, you’re unlikely to see it again.
You may be perfectly happy with the current system, and rarely make typing errors. In this case you’ll wonder what the fuss is about. I just don’t see why it needs to be so dangerous, when it’s so easy to make it safe. Banks could be forced to check the name on a transfer instruction against the name of the receiving account, for instance. That would be enough to save us from being heavily punished for a minor error.
You might wonder why these measures aren’t already being carried out. Banks have been known to protest that it would be too difficult and expensive. They should try Googling ‘string comparison’, then discuss it with their developers.
Will the new organisation look at any of these things? Will it put customers’ welfare before the banks’ convenience? Will any changes be made? Don’t hold your breath.
- News story: Government to overhaul UK payments system (gov.uk)
- Bank reform plans could open up text message payments (telegraph.co.uk)
- Regulator warns of dangers of mobile banking (theguardian.com)