Spelling out the problems as banks' name-checker rejects vital payments

I have been unable to receive a payment I am owed because automated messages repeatedly inform the sender that the payee’s name doesn’t match the name on my account.

Because nearly all my work has dried up due to the pandemic, payments are more important than ever. A friend tried to send me a bank transfer and also got the “name does not match” warning.

I’ve spent more than eight hours trying to resolve this with my bank, Nationwide. Staff had no idea why the name didn’t match and asked the sender to reattempt the transfer repeatedly using Mrs and Ms, or no title at all.

Eventually, Nationwide decided it was the fault of the sender’s bank, Lloyds, but Lloyds refused to deal with me because I’m not a customer. Another friend, who banked with Lloyds, received the same message when attempting a money transfer and Lloyds told them the fault lay with Nationwide, whereas a third person was able to transfer from her HSBC account without issue.

I don’t have enough friends to test out all the different banks and have hit a brick wall.

MdW, Reading

“Confirmation of Payee” was introduced in March to combat fraud and misdirected payments. Until then, the name of the account holder was irrelevant, as banking systems only checked the account number and sort codes, enabling scammers to deceive customers into thinking they were paying a trusted person.

The six biggest banking groups were obliged to sign up to the scheme by the end of June, but there have inevitably been problems. Personal and company names can be written in a variety of formats, including initials, middle names, hyphens and ampersands. People who are known by a nickname or middle name in day-to-day life are likely to have their legal name on their bank accounts, and the trading name of a firm is not always the same as the account name.

Systems should be flexible enough to recognise a broad match with the account number, especially given that your name is uncommon. According to the Financial Services Ombudsman, it’s up to banks how they implement matching criteria and some are stricter than others, although it has yet to receive any complaints.

When I contacted Lloyds and Nationwide they continued to blame each other. Nationwide says a misplaced comma required to separate forenames and surnames caused the problem. “When Lloyds sent the member’s name to get a match decision, part of her surname was included as part of her first name, resulting in a ‘no-match’ decision,” it says.

“Unfortunately, our branch colleague was not able to offer an explanation. We have apologised for the inconvenience and offered her £100 compensation and we are also working with Lloyds to resolve the issue.”

Lloyds says it was satisfied that the format it provided should have allowed at least a partial match, and that it’s liaising with Nationwide to ensure future payments are unhindered. Nationwide admits the algorithms used are complex and that the banking sector is still trying to establish a common approach to the new system.

I’d be interested to hear if anyone else has encountered problems.

If you need help email Anna Tims at your.problems@observer.co.uk. Include an address and phone number. Submission and publication are subject to our terms and conditions