Bank of Ireland UK Arm Receives £3.8m Penalty for Delayed Anti-Fraud Measures
The Bank of Ireland's UK division has been issued a substantial financial penalty of £3.8m by the Payments Systems Regulator (PSR) for failing to meet a crucial deadline to implement an anti-fraud service. The lender missed the mandated timeline by more than a year, specifically 14 months, to activate a system designed to send requests for confirmation of payee checks.
Critical Deadline Missed, Exposing Billions in Transactions
The deadline for implementing this vital service was set for October 31, 2023. However, Bank of Ireland UK did not have the system fully operational until January 2025. This delay meant that approximately 1.14 million new payee transactions, totaling nearly £7bn, were processed without the essential safeguard in place.
David Geale, managing director at the PSR, emphasized the importance of the confirmation of payee system, stating: "Confirmation of payee is a vital tool to combat fraud and misdirected payments, giving people confidence that their money is going exactly where they intend. Bank of Ireland UK had plenty of time to put the system in place, missing the deadline by more than a year put its customers at increased risk of fraud."
System Function and Regulatory Context
The confirmation of payee service acts as an account name checking mechanism, providing protection for customers during payment processes and helping to prevent authorised push payment (APP) scams. In these scams, fraudsters impersonate legitimate organizations to deceive individuals into transferring funds.
By agreeing to settle at an early stage of the enforcement process, Bank of Ireland UK qualified for a 30 percent discount, reducing the original fine from £5.4m to £3.8m. The bank issued a statement acknowledging the delay: "The bank fully acknowledges and sincerely apologizes for the delay in implementing send requests for confirmation of payee, which has been in place for all customers since January 2025. The bank takes its regulatory obligations extremely seriously and regrets that this issue arose."
Broader Regulatory Landscape in UK Banking
This fine places Bank of Ireland UK among other financial institutions that have faced significant regulatory penalties in recent times:
- Nationwide received the largest fine in the financial services sector last year, amounting to £44m, for failures in its financial controls.
- Barclays was fined £42m due to deficiencies in its financial crime risk management systems.
- Monzo, the digital bank, was penalized £21m for repeatedly opening accounts for high-risk customers, including instances where addresses like 10 Downing Street and Buckingham Palace were used fraudulently.
The PSR's action underscores ongoing regulatory efforts to strengthen fraud prevention measures across the UK banking industry, ensuring that institutions adhere to strict timelines and protocols designed to protect consumers from financial crime.
