The Bank of England has warned that there could be some disruption to the processing of payments for consumers and businesses at the end of the Brexit transition period.
Processing payments, including Single Euro Payments Area (SEPA) payments, between the UK and EU will require additional information to be included after the end of the transition period, such as payers’ addresses.
While banks will generally hold payers’ information for credit transfers originating from their customers, they are less likely to hold it for direct debits, where payments are initiated by creditors, says the Bank of England in its annual financial stability report.
"Banks have been putting the necessary information in place," states the BofE. "Larger UK firms are generally well advanced in providing the information, but there is less clarity about the progress of EU firms. To the extent that gaps remain at the end of the transition period, they are likely to result in some disruption to both EU and UK customers and businesses seeking to make and receive such payments."
Financial institutions should continue taking measures to minimise disruption, says the central bank, including by engaging with clients and customers.