Ring-fencing legislation: Structural reform in banking services and the risk of fraud

Charity

Price Bailey is committed to solving business challenges and keeping our clients up to date with the very latest changes and developments in UK legislation.

Since March last year, it’s been widely reported that the UK’s largest banks will have to adhere to new ring-fencing legislation being introduced from 1 January 2019. This new legislation will mean banks will be required to separate core retail banking from investment banking from next month. In this blog, written exclusively for Price Bailey, Billy Bradley, Relationship Director, Charities Team, Barclays, lays out what this means and how this will affect clients.

Ring-fencing of day-to-day banking services is one of the reforms brought in by the UK government, aiming to strengthen the UK financial system following the financial crisis that began in 2008.

Ring-fencing legislation requires each of the larger UK high street banks, including Barclays, to separate certain retail and smaller corporate banking activity and products, like savings accounts, current accounts and payments, from more complex, wholesale and investment banking activity and from certain activities outside of the UK. The separation has to be completed by 1 January 2019. Barclays satisfied the requirement in April 2018 by setting up a new ring-fenced bank, Barclays Bank UK PLC, separate from Barclays Bank PLC, with all impacted clients migrated by this date.

To comply with ring-fencing legislation, a number of customer and client sort-codes will have changed in order to be held within either the ring-fenced or non-ring fenced banks. Accounts and sort codes have only changed to another Barclays sort code (so all will still start with 20-XX-XX). Requests to change to any other sort code prefix are not related to structural reform/ring-fencing and should be treated with caution.

The industry-wide sort code changes (and account number changes depending on which bank you are with) will not happen overnight and a number of measures will be in place to ensure that payments still reach their intended destination account. Payments will be redirected for up to three years to ensure payments made to old account details are still applied to the correct account. Customers should be aware of the possibility of fraud given the high volume of sort code and account number changes that will be taking place across the UK. Things to bear in mind include:

  • How will you validate instructions to amend bank details for payments?
  • Any payment requests with a change in bank details received by email, letter or phone must be verified by speaking with the supplier using contact details held on file. Make all staff aware and ensure there is a process in place to do this.
  • Ensure you validate the exact sort code and account details in full
  • Electronic payments in the UK are made based on sort code and account number only. Any account name given is not routinely checked. This is the same for all UK banks and is the responsibility of the remitter to ensure the account details being used are correct by conducting independent verification.
  • Barclays will not send emails which contain links or attachments unless you have been advised in advance.
  • Barclays will not make requests for payments or security details via email or any other communication.

Barclays and Price Bailey are committed to supporting our customers and clients to combat fraud and
cybersecurity breaches. For more information, please access:

Barclays Fraud Smart Centre – https://www.barclayscorporate.com/insight-andresearch/
fraud-smart-centre.html

If you have any further questions on how this might affect your business or charity, please feel free to get in touch with Helena Wilkinson, Charity Partner at Price Bailey using the contact form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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