Faster Payments too slow: Consumers lose £38m

Almost a year after its launch, consumers are still not getting the benefit of the Faster Payments Service, according to the Office of Fair Trading - and could be losing millions as a result.

Under the Faster Payments Service (FPS), which went live in May 2008, payments between bank accounts can be cleared within minutes or hours, rather than days.

However, the Office of Fair Trading (OFT) has warned that the body overseeing the FPS, the Payments Council, needs to do more to make sure banks are actually using the service.

"The Payments Council needs to follow up its initiatives with its members - typically the banks - to ensure that end-users actually get the benefits envisaged. This includes improving take-up of the Faster Payments Scheme," the OFT said in a report published this week.

The slow rollout of FPS among banks could be costing millions, according to the OFT, as a significant percentage of payments that should be made through FPS are currently not being done so.

On one day in March, only 69 per cent of payments that should be made through FPS were, the OFT found, and it's expected to be June before the figure hits 100 per cent. As a result, consumers have lost between £38m and £82m.

"The system has not suffered from any serious incidents, and has proved a reliable method of payment for consumers that are able to use it. But shortcomings have become obvious in the ability of the Payments Council both to ensure delivery of a large scale payment project to timetable, and to ensure that its members pass on the benefits to their customers within a reasonable timescale," the report said.

The OFT also criticised the Payments Council for not having users sufficiently involved in Faster Payments.

"The OFT's main concern is that there do not seem to be any plans for specific user representation for the Faster Payments scheme… We consider that this is a major shortcoming. Payment schemes managed by banks and other payment institutions cannot accurately represent the interests of other stakeholders in a payment system," it noted.

Brian Pomeroy, chairman of the Payments Council, said that the organisation will take the feedback on board.

"Inevitably the OFT has pointed out some examples where the Payments Council will wish to review its performance and we will look at these closely. We will discuss within the Payments Council how best to ally their points with our overall objectives of strategic vision, transparency and integrity," he said in a statement.