In relation to the UK banking system, it is different to that in Australia, An example being that the UK only requires a photo ID and a proof of address. There isn’t a 100 type point system that Australia (and the government inked verification process which is becoming more common across the banking/financial system) uses to satisfy regulatory requirements for proof of identity. In the UK it also appears that some institutions allow holders to select their own account name. This has been a weakness in their system as it allows criminals to select names which are similar to identities they are thieving for their scams (this allows a partial mismatch alert in the CoP system). Australia doesn’t allow account holders to select the name of the accounts and the account has to be in the name of the account holders (person’s name) or the business name (trust, company or sole trader’s name).
Extrapolating any UK banking regulations to Australia may be difficult since the banking systems are different in their operation. The UK system has weaknesses which possibly don’t exist in Australia and their Confirmation of Payee is addressing some of these weaknesses.
There are also many reports under the UK confirmation of payee system of bank transfers being paused for no apparent reasons, even when the account names are exactly the same of the recipient accounts. It is suggested that this is because each bank is also interpreting the confirmation of payee differently and thus adopting different internals systems for processing transfers.
One of the main drivers with the UK system is to avoid accidental transfers to the wrong bank account, through the sender typing in the account number accidentally. It also has a secondary effect against authorised push payment scams (which is requests for payment to a fraudster posing as a genuine payee - this is increasing particularly with businesses where invoices can be issued and processed - see below). APPs have been accelerating dramatically in the UK due to their adopted instantaneous payment systems (where payment is instantaneous and the money when sent is unrecoverable). I haven’t heard the same in Australia with consumers, but it has been increasing with businesses.
To combat scams the UK government still recommends that consumers/business not rely wholly on CoP but adopt the UK Take Five Stop Fraud program.
The UK CoP system, if they receive a message that the name is a partial or full mismatch, a sender can continue the/authorise transfer of payment to the recipient without the correct/modified account names. There has been discussion in the UK that this will continue to allow transfers to scammers who have spent time building up a relationship with the victim, as they can manipulate/provide reasons why the account name has been flagged by the confirmation of payee system. As I have highlighted earlier, there is the psychology of scams in play and red flags which should be seen, are often not recognised. These type of scams are the ones which we hear of in the news and mostly affect the broader community.
It appears that the greatest benefit will be to those scams where one receives payment requests for some reason (such as a payment invoice where business may not take the time to reconcile all purchased before payments are made and the processed invoice is fraudulent) or major bank transfers (such as that which has occurred where a scammer/criminal gang has intercepted communications about a legitimate bank transfer and replaced the transfer details with other own). It is worth noting that again that a sender can still approve the transaction with a mismatch partial or full account name - but for an individual where there is no relationship with the scammer, it might be enough to stop a consumer paying a ‘bill’ if things don’t look right).
I understand that authorisation for sender can still approve the transaction with a mismatch partial or full account name is for business, where they may have 100s, if not 1000s of batch transfer each month and trying to resolve each and every mismatch may not be in the benefit of the business (especially if they reconcile accounts before payment and know that the payment is genuine and the mismatch is at their end).
Edit: the other comment which I failed to make earlier is the UK banking system has evolved differently in the past few decades. One of the main differences is the UK financial system has been partly driven by the needs to allow cross border transfers, investments and payments through the EU. While the UK is no longer part of the EU, the legacy remains. Australia hasn’t had the same pressures or requirements with its neighbours.