Your Defence Against Financial Loss

Your defence against financial loss

This year UK organisations will put hundreds of millions of pounds into wrong accounts. Much of this money will be irretrievably lost. Also, organisations will fail to collect millions in Direct Debits. How can you protect against this very real risk? AFD Software has launched a fast, powerful and affordable service as a key defence against financial loss. The aim is to cut this tragic waste of money by dealing with the root causes.

That’s where Confirmation of Payee (CoP) helps. It’s a security check that ensures the account name, sort code, and account number all match the details held by the bank before a payment is made. If something doesn’t match, the sender is warned before making a costly error.

Prevent misdirected payments

The new AFD Confirmation of Payee (CoP) service is a secure, real-time check that the bank sort code, account number and account name match those held by the payee bank record. Using this new service is a strong, effective mitigation against payments to suppliers, staff or clients being mis-directed. It is also an affordable fast way to check the bank details of user-completed Direct Debit forms. Errors are automatically detected enabling the user to correct them prior to form submission. This enables successful Direct Debit transfers.

Guard against sophisticated deception

A key driver to the introduction of CoP is that deceptions which trick internal staff have become more sophisticated and pervasive. Staff are deceived into altering bank sort code and account number details while cleverly not being asked to alter the payee name. Often, communications to the staff member appear absolutely legitimate, such as from a board Director. AFD CoP closes this scammer’s loophole by instantly checking that all three payment credentials—sort code, account number, and payee name—match the bank record before the transaction takes place. Another key risk is human error: one transposed figure can lead to money being transferred into an unknown account. Both are known as “misdirected funds.”

Direct Debit Failures

With new Direct Debit setup, many organisations ask consumers, donors, or businesses to enter their own account details into online forms or provide them over the telephone. Inevitably, this is prone to human error, with mistakes only coming to light after the Direct Debit instruction fails. Any mistake means the instruction cannot be set up and money cannot be received. Correction after the event is time-consuming, and sometimes even the best efforts to contact the payer simply don’t work.

User Direct Debit form completion errors come at a huge cost in terms of revenue, cash flow, and administration overheads. These negatively impact the finances of charities, membership bodies, utilities, and many other sectors. The AFD CoP service highlights and enables correction of these errors at the source.

Fund Retrieval – Impossible or High Cost

There is a legitimate anxiety among those responsible for payments about the risk of misdirected payments, whether due to error or fraud. The reality is that a substantial portion of misdirected funds are uninsured and can never be recovered—or, at best, would be recovered at a substantial cost, both human and financial. Often, the time of the most senior staff or external experts would be required. The AFD CoP service is a significant risk mitigation—a simple, cost-effective process.

Don’t Banks Cover This Now?

There are two common misconceptions. First, that banks will refund fraud and misdirection losses. This only applies to consumers, micro-businesses, and small charities—not to any other organisation. The second misconception is that banks will carry out a check before transferring funds. This belief is reinforced because manual payments set up directly with a bank ARE checked, but that’s where it stops.

While CoP is mandated for all firms in the finance sector, beyond this, the responsibility to check details does not lie with the banks. For example, banks have no obligation to carry out CoP checks for batch payments uploaded by their commercial customers—the onus and risk remain with the organisation.