Additional Guidance: Detail on Mandating ISO 20022 Enhanced Data in CHAPS

1: Overview

This Guidance builds on our December 2020 Policy Statement: Implementing ISO 20022 Enhanced Data in CHAPS (Policy Statement) by providing the next level down in detail on the Bank of England’s (the Bank) mandating of enhanced data in CHAPS payments.

This Guidance responds to questions raised in bilateral conversations with CHAPS Direct Participants (DPs), our continuing regular dialogue with Pay.UK as part of our joint responsibility for the ‘Common Credit Message’ (see section 2 of the Policy Statement) and through our discussions with members of the Standards Advisory Panel. It also provides links to relevant documents that have been published since the Policy Statement. The content in this Guidance is in line with the direction of policy set out in the Policy Statement, and the Bank continues to recognise the need for industry to have certainty over the future direction of policy.

The approach set out in the earlier Policy Statement still applies in full, and each section of this Guidance provides a summary as a reminder. The sections then provide further detail and clarifications for each policy area of Enhanced Data, answering questions around scope, data quality and our approach to compliance.

Any material changes going forward will be updated on this webpage, noting the date of the updated version.

This document is broadly split into the following sections:

• Market Guidance published since the Policy Statement (Section 2)
• Enhanced Data Policy Areas: Purpose Codes, LEIs, Structured Remittance Data, Structured Addresses, and Extended Character Sets (Section 3)
• Compliance Approach (Section 4)

Who should read this Guidance?

• Payment service providers who are current or prospective CHAPS Direct Participants or indirect participants.
• Users who make or are otherwise responsible or involved in the initiating or processing of CHAPS payments.
• Technology vendors who provide financial institutions or corporates with solutions for initiating, processing or reconciling CHAPS payment messages.
• Any other stakeholder, such as trade associations, industry groups and regulatory bodies with an interest in the future of UK payments.

If you have any further queries not covered in this publication, please contact RTGSReadiness@bankofengland.co.uk

2: Market Guidance since the Policy Statement

As part of the global transition to the ISO 20022 messaging standard, the Bank, as operator of CHAPS, is working to align the UK’s transition approach.

The Bank will continue to work with industry stakeholders and Pay.UK to define best practice for a range of different market sectors for implementing the ISO 20022 messaging standard in order to realise the benefits of Enhanced Data. As part of this, the Bank has published guides on how the benefits of ISO 20022 enhanced data can be realised as effectively as possible in the specific sectors.

• In April 2021, the Bank published the Market Guide for the property market sector.
• In February 2022, the Bank published the Market Guide for the corporate market sector.

The Bank will look to industry views in prioritising the development of any further guidance. For more information, please refer to Section 5 of the Policy Statement.

3: Enhanced Data Policy Areas

a: Purpose Codes

The summary in the box above remains the overall Policy approach.

Channel dependent mandatory requirements

The scope of the Bank’s mandatory requirements for the use of Purpose Codes (for FI-to-FI and property payments) applies to all payments made via a channel which is controlled by the DP itself. This includes data received via online banking, direct file submission from a corporate client, and existing internal data (e.g. from an internal CRM solution). In these channels, the DP should ensure that it is gathering the source data required to use the Purpose Code.

Therefore, the scope of the mandatory requirements do not apply – at this point – to payments submitted via a channel which is not controlled by the DP, although they are encouraged. This may include data passed on to a DP via a CBPR+ pacs.009 or pacs.008 message, or CGI-MP pain.001 message. We are particularly mindful of the challenges DPs might face in entering Purpose Codes in cross-border payments where the implementation of the ISO 20022 message standard for CHAPS runs ahead of some jurisdictions, or where the originating PSP (either domestic or cross-border) can only correspond with the DP via SWIFT MT messaging until November 2025.

The Bank will take a proportionate approach to compliance with the mandatory requirement for Purpose Codes in the CHAPS rulebook through our broader assurance process. This means that before 2025, we will not reject payments solely due to incomplete or incorrect Purpose Codes, but we will monitor and consider follow-up actions where there are significant departures from the Bank’s expectations. The Bank encourages the use of Purpose Codes for all CHAPS payments, including strongly recommending that customers include enhanced data when submitting payments via channels not controlled by the DP, where possible. This is in order to ensure that the benefits of the ISO 20022 payment messaging standard can be realised across the payments industry as soon as possible. For more information, please refer to section 4 on the Bank’s Compliance Approach.

Payments between Financial Institutions

For the purposes of the first stage of mandating the use of Purpose Codes from November 2024, payments between Financial Institutions (FIs) are defined as CHAPS payments made via:

1. All pacs.009 payment messages, or
2. A pacs.008 payment message where both the ultimate sender and ultimate beneficiary are PRA authorised deposit-takers or broker-dealers, or Financial Market Infrastructures supervised by the Bank of England, or institutions holding an account in the real-time gross settlement system (RTGS).

For all pacs.004 return payment messages, the Bank expects CHAPS DPs to ensure that there is no loss of any enhanced data.

In the longer term, our vision is to widen this requirement to all participants (and therefore all FIs) over time. The Bank will provide industry with at least 18 months’ notice in advance of extending any mandatory requirements for Purpose Codes beyond what is already outlined in the Policy Statement and this Guidance.

Property Purpose Codes

From November 2024, the Purpose Codes most directly related to Property payments will be mandated:

Other Purpose Codes indirectly related to property

In November 2024, the Bank will strongly encourage but not mandate the use of Purpose Codes for CHAPS payments indirectly related to property transactions outside of those listed above, such as property/housing tax, property insurance, rent, rental lease, housing related contribution or building maintenance.

However, to increase the benefits of ISO 20022 migration, the Bank strongly encourages all CHAPS DPs to start using Purpose Codes as soon as the DP is capable of sending enhanced data, and the Bank’s vision is to widen the requirement to all CHAPS payments over time. The Bank will provide industry with at least 18 months’ notice in advance of extending any mandatory requirements for Purpose Codes in CHAPS.

Category Purpose Code

The Category Purpose Code is primarily for use by sending Payment Service Providers (PSPs) to signal to receiving PSPs some specific high-level properties of a payment instruction to help with processing. (By comparison, the Purpose Code is a more specific four-letter code to denote the reason for a payment.)

In the 2020 Policy Statement, the Bank originally referred to Category Purpose Codes and Purpose Codes collectively. However, following feedback from industry and a review of the current usage of Category Purpose Codes, the Bank will not be mandating the use of Category Purpose Codes at this stage.

In practice, the Bank expects the Purpose Code in particular to provide the benefits of enhanced data, as a specific code denoting the reason for the payment. Therefore, the Policy Statement’s sections on mandating the use of the Purpose Code can be taken to be specific to the Purpose Code (and not the Category Purpose Code as well). Nevertheless, it may still be useful for DPs to use the Category Purpose Code.

The recommended UK Purpose Code List

The Bank and Pay.UK have jointly developed the recommended UK Purpose Code List. Following feedback from industry, the UK list is shorter than the international External Code Set. This aims to increase usability (identifying codes most likely to be applicable to the vast majority of UK users) and data quality through consistent application. 

Purpose Codes not on the recommended UK List

All Purpose Codes in the international External Code Set will continue to be accepted in CHAPS (and in the NPA by Pay.UK when live) to maximise international compatibility. However, the Bank encourages the use of the UK Purpose Code List for UK-originated CHAPS payments; and DPs should only use the wider External Code Set when there is a specific need to send a code with an overseas payment that is not on the UK list.

The full international External Code Set of all acceptable Purpose Codes is part of the ISO 20022 repository.

Changes to the recommended UK Purpose Code List

The Bank and Pay.UK reserve the right to make changes to this recommended UK Purpose Code list, although we do not foresee any changes in the near future. We will seek to minimise material changes in the interests of consistency for all stakeholders. Changes to the list requested by industry will require clear justification and demand, and be reviewed jointly by the Bank and Pay.UK as part of their regular ISO 20022 change management processes.

Who must provide the Purpose Code

The Bank has not set expectations on who must provide the Purpose Code or whether this can be derived by CHAPS DPs (as also suggested by other responses to our Purpose Code consultation). Generally, we expect the originator of the payment to be closest to the payment’s purpose and therefore able to provide the highest quality data, but we have not set this as a requirement. As stated in our Purpose Code Consultation Response, while we are aware of the benefits of consistent usage, we recognise that the way CHAPS DPs implement Purpose Codes in their customer channels is in the competitive space. Ultimately, the requirements for mandating data quality standards fall on CHAPS DPs as the organisation submitting payment messages to CHAPS. It will be for each CHAPS DP to decide what data they will provide on behalf of their customers, and what they will require from them, to achieve the high standards of data completeness and quality the Bank is expecting.

Consistent usage

To help establish the consistent use of Purpose Codes, the Bank will work with Pay.UK to engage with CHAPS DPs and industry representative groups later this year to co-ordinate guidance. The Bank intends to publish this guidance on its website.

b: LEIs

The summary in the box above remains the overall Policy approach.

Channel dependent mandatory requirements

The scope of the Bank’s mandatory requirements for the use of LEIs (for FI-to-FI payments) applies to all payments made via a channel which is controlled by the DP itself. This includes data received via online banking, direct file submission from a corporate client, and existing internal data (e.g. from an internal CRM solution). In these channels, the DP should ensure that it is gathering the source data required to use the LEI.

Therefore, the scope of the mandatory requirements do not apply – at this point – to payments submitted via a channel which is not controlled by the DP. This may include data passed on to a DP via a CBPR+ pacs.009 or pacs.008 message, or CGI-MP pain.001 message. We are particularly mindful of the challenges DPs might face in entering LEIs in cross-border payments where the implementation of the ISO 20022 message standard for CHAPS runs ahead of some jurisdictions, or where the originating PSP (either domestic or cross-border) can only correspond with the DP via SWIFT MT messaging until November 2025.

The Bank will take a proportionate approach to compliance with the mandatory requirement for LEIs in the CHAPS rulebook through our broader assurance process. This means that before 2025, we will not reject payments solely due to incomplete or incorrect LEIs, but we will monitor and consider follow-up actions where there are significant departures from the Bank’s expectations. The Bank encourages the use of LEIs for all CHAPS payments, including strongly recommending that customers include LEIs when submitting payments via channels not controlled by the DP, where possible. This is in order to ensure that the benefits of the ISO 20022 payment messaging standard can be realised across the payments industry as soon as possible. For more information, please refer to section 4 on the Bank’s Compliance Approach.

Payments between Financial Institutions

For the purposes of the first stage of mandating the use of LEI from November 2024, payments between Financial Institutions (FIs) are defined as CHAPS payments made via:

1. All pacs.009 payment messages, or
2. A pacs.008 payment message where both the ultimate sender and ultimate beneficiary are PRA authorised deposit-takers or broker-dealers, or Financial Market Infrastructures supervised by the Bank of England, or institutions holding an account in the real-time gross settlement system (RTGS).

For all pacs.004 return payment messages, the Bank expects CHAPS DPs to ensure that there is no loss of any enhanced data.

In the longer term, our vision, supported by Pay.UK, is to widen this LEI requirement to all participants (and therefore all FIs) over time. The Bank will provide industry with at least 18 months’ notice in advance of extending any mandatory requirements.

Multiple agents in a payment chain

Where there are multiple agents in payments between FIs (as defined in the section Payments between Financial Institutions), the Bank expects LEIs to be populated for all FI agents, given that most institutions that make these payments already possess LEIs.

More generally, the Bank expects LEIs to be included for as many parties in the transaction as possible, similar to the position taken by Pay.UK in the NPA.

Other FIs

The Bank has not yet set a date for mandating the use of LEIs for pacs.008 payment messages between financial institutions not in scope of the conditions set out in the section “Payments between Financial Institutions”. As above, the Bank has mandated the use of the LEI for all pacs.009 payment messages. The Bank encourages all CHAPS DPs to start using LEIs as early as possible, once the DP is capable of sending enhanced data, in order to ensure that the benefits of the ISO 20022 payment messaging standard can be realised across the payments industry as soon as possible. With Pay.UK, we have previously stated our vision to widen the requirement to all participants over time. The Bank welcomes DPs checking whether other FIs already possess LEI(s) during on-boarding these firms as customers.

Who must provide the LEI

The Bank has not set expectations on who must enter the LEI or whether this can be looked up. Generally, we expect the originator of the payment to be closest to knowing the particular corporate entity that the payment is intended for and therefore able to provide the highest quality data, but we have not set this as a requirement. Ultimately, the requirements for mandating data quality standards falls on CHAPS DPs as the organisation submitting payment messages to CHAPS. It will be for each CHAPS DP to decide what data they will provide on behalf of their customers, and what they will require from them, to achieve the high standards of data completeness and quality the Bank is expecting.

BIC lookup

The benefits of richer data resulting from the implementation of the ISO 20022 messaging standard rely on the enhanced data sent being of sufficient quality. While the BIC lookup is useful, defaulting to the incorrect LEI where there are multiple LEIs for a BIC risks providing inaccurate data, as well as not adding any of the benefit of the LEI as enhanced data. The Bank will use the GLEIF Global Index when monitoring the use of the LEI in CHAPS payments.

Future path of expansion

The Bank is beginning to engage with industry on the best path for widening the LEI requirement to all CHAPS payments, for example, by sector or by size of institution. In choosing the path, the Bank is aiming to maximise the benefit from enhanced data while minimising the burden on reporting. In our response to the 2019 Future of Finance report, the Bank stated that it will champion the LEI as a globally recognised and unique identifier for all businesses in the UK, including integrating the LEI in the Bank’s new RTGS service and mandating its use in payment messages. This position is also supported by Pay.UK in its implementation of the NPA.

Further LEI FAQs

For more detailed questions relating to the LEI itself, please see GLEIF’s FAQs.

c: Structured Remittance Data

The summary in the box above remains the overall Policy approach.

Channel dependent mandatory requirements

The scope of the Bank’s mandatory requirements for the use of Structured Remittance data applies to all payments made via a channel which is controlled by the DP itself. This includes data received via online banking, direct file submission from a corporate client, and existing internal data (e.g. from an internal CRM solution). In these channels, the DP should ensure that it is gathering the source data required to use Structured Remittance data.

Therefore, the scope of the mandatory requirements do not apply – at this point – to payments submitted via a channel which is not controlled by the DP. This may include data passed on to a DP via a CBPR+ pacs.009 or pacs.008 message, or CGI-MP pain.001 message. We are particularly mindful of the challenges DPs might face in entering Structured Remittance data in cross-border payments where the implementation of the ISO 20022 message standard for CHAPS runs ahead of some jurisdictions, or where the originating PSP (either domestic or cross-border) can only correspond with the DP via SWIFT MT messaging until November 2025.

The Bank will take a proportionate approach to compliance with the mandatory requirement for Structured Remittance data in the CHAPS rulebook through our broader assurance process. This means that before 2025, we will not reject payments solely due to incomplete or incorrect Structured Remittance data, but we will monitor and consider follow-up actions where there are significant departures from the Bank’s expectations. The Bank encourages the use of Structured Remittance data for all CHAPS payments, including strongly recommending that customers include Structured Remittance data when submitting payments via channels not controlled by the DP, where possible. This is in order to ensure that the benefits of the ISO 20022 payment messaging standard can be realised across the payments industry as soon as possible. For more information, please refer to section 4 on the Bank’s Compliance Approach.

Relevant guidance for structuring Remittance Data

When monitoring the quality of enhanced data submitted, the Bank will expect DPs to be mindful of the relevant domestic and international guidance for that use-case. The Bank will continue to engage with SWIFT’s Payments Market Practice Group (PMPG), industry and other payment system operators on the approach to Structured Remittance Data until and beyond such time that SWIFT retires MT messaging for payments: currently expected to be in November 2025.

Who must provide the Structured Remittance Data

The Bank has not set expectations on who must provide the Structured Remittance Data or whether this can be structured by DPs. Generally, we expect the originator of the payment to be closest to knowing the most accurate structure of Remittance Data for the payment and therefore able to provide the highest quality data, but we have not set this as a requirement. Ultimately, the requirements for mandating data quality standards falls on CHAPS DPs as the organisation submitting payment messages to CHAPS. It will be for each CHAPS DP to decide what data they will provide on behalf of their customers, and what they will require from them, to achieve the high standards of data completeness and quality the Bank is expecting.

d: Structured Addresses

The summary in the box above remains the overall Policy approach.

Channel dependent mandatory requirements

The scope of the Bank’s mandatory requirements for the use of Addresses applies to all payments made via a channel which is controlled by the DP itself. This includes data received via online banking, direct file submission from a corporate client, and existing internal data (e.g. from an internal CRM solution). In these channels, the DP should ensure that it is gathering the source data required to use Structured Addresses.

Therefore, the scope of the mandatory requirements do not apply – at this point – to payments submitted via a channel which is not controlled by the DP. This may include data passed on to a DP via a CBPR+ pacs.009 or pacs.008 message, or CGI-MP pain.001 message. We are particularly mindful of the challenges DPs might face in entering Structured Addresses in cross-border payments where the implementation of the ISO 20022 message standard for CHAPS runs ahead of some jurisdictions, or where the originating PSP (either domestic or cross-border) can only correspond with the DP via SWIFT MT messaging until November 2025.

The Bank will take a proportionate approach to compliance with the mandatory requirement for Structured Addresses in the CHAPS rulebook through our broader assurance process. This means that before 2025, we will not reject payments solely due to incomplete or unstructured addresses, but we will monitor and consider follow-up actions where there are significant departures from the Bank’s expectations. The Bank encourages the use of Structured Addresses for all CHAPS payments, including strongly recommending that customers include Structured Addresses when submitting payments via channels not controlled by the DP, where possible. This is in order to ensure that the benefits of the ISO 20022 payment messaging standard can be realised across the payments industry as soon as possible. For more information, please refer to section 4 on the Bank’s Compliance Approach.

When to include

The Bank will expect all CHAPS DPs to use Structured Addresses where address is included from June 2023, once the DP is capable of sending enhanced data. This aligns with the SWIFT CBPR+ guidelines that where address is included, structured address is preferred.

Minimum fields

To align with SWIFT guidelines, where a structured address is used it must contain a minimum of town name and country. The Bank is cognisant of the challenges presented by how the first lines of some UK postal addresses are formatted in some databases. From 2025, the Bank will require the Building Number and Street Name fields to be split within Structured Addresses. Until that time, the Bank is content for Building Number and Street Name to be provided together within the Street Name field only where it is difficult to separate them. Please visit the PMPG Document Centre for the most updated documentation from both the PMPG and SWIFT, mapping local postal address formats to the fourteen ISO 20022 Structured Address elements.

Aligning with SWIFT timeline

The Bank will mandate all Direct Participants to use Structured Addresses for all payments when SWIFT retires MT messaging, in line with Pay.UK’s approach for the NPA. This is currently expected in November 2025.

e: Extended Character Set

The Bank’s position has not changed on the above approach, as with previous sections. Any extension is not expected before 2026 at the earliest.

Interoperability

We are aware and engaging with Pay.UK on their proposal to include a wider set of characters than is currently used in the relevant ISO 20022 payment message market practices (e.g. HVPS+ and CBPR+).

Whilst the Bank has no immediate plans to extend its character set, the renewed RTGS system will be capable of supporting wider character sets and we acknowledge that there may be benefits in doing so eventually. For example, this could be to include jurisdiction or language specific characters for names. The Bank’s Technical Guidance maintains interoperability (including with future contingency options) by requiring DPs to replace any characters not in the CHAPS character set to a Full Stop (.), in line with CBPR+.

We would support extending the existing character sets in accordance with domestic and / or international market requirements following extensive industry engagement.

4: Compliance approach

The summary in the box above remains the overall Policy approach.

Assurance process

Whilst the Bank does not initially intend to reject payments featuring incomplete enhanced data, the Bank will make the completion of the specified data mandatory through the CHAPS rulebook. This will allow the Bank to review compliance against its rulebook as part of its broader assurance process and consider follow-up actions where there are significant departures from the Bank’s expectations on completing mandatory enhanced fields, for example by not including LEIs where expected or where there are systematic issues with LEIs not being valid or up-to-date.

The Bank’s broader assurance process is based on CHAPS DP self-certification. The CHAPS DP must self-declare each non-compliance, and provide a remediation plan. For more information on assurance, please see section 7 of the CHAPS Reference Manual.

The Bank recognises that the introduction of enhanced data will be new to DPs, so is not expecting a 100% compliance rate from November 2024. However, the Bank will expect the quality of data submitted to improve over time (and for CHAPS DPs to have plans in place to do so where possible).

In addition to DP self-certification, the Bank will be monitoring the usage of enhanced data for CHAPS more broadly, and how this evolves over time.

Channel dependent mandatory requirements

The scope of the Bank’s mandatory requirements for the use of enhanced data applies to all payments made via a channel which is controlled by the DP itself. This includes data received via online banking, direct file submission from a corporate client, and existing internal data (e.g. from an internal CRM solution). In these channels, the DP should ensure that it is gathering the source data required to use enhanced data.

Therefore, the scope of the mandatory requirements do not apply – at this point – to payments submitted via a channel which is not controlled by the DP. This may include data passed on to a DP via a CBPR+ pacs.009 or pacs.008 message, or CGI-MP pain.001 message. We are particularly mindful of the challenges DPs might face in entering enhanced data in cross-border payments where the implementation of the ISO 20022 message standard for CHAPS runs ahead of some jurisdictions, or where the originating PSP (either domestic or cross-border) can only correspond with the DP via SWIFT MT messaging until November 2025.

The Bank will take a proportionate approach to compliance with the mandatory requirement for enhanced data in the CHAPS rulebook through our broader assurance process. This means that before 2025, we will not reject payments solely due to incomplete or incorrect enhanced data, but we will monitor and consider follow-up actions where there are significant departures from the Bank’s expectations. The Bank encourages the use of enhanced data for all CHAPS payments, including strongly recommending that customers include enhanced data when submitting payments via channels not controlled by the DP, where possible. This is in order to ensure that the benefits of the ISO 20022 payment messaging standard can be realised across the payments industry as soon as possible.

Moving to rejecting payments

The Bank intends to move to a model of rejecting payments where mandatory enhanced data is incomplete or inaccurate in due course. The date for moving to this model will depend on certain external factors such as international progress on transitioning to the full implementation of the ISO 20022 messaging standard, including CBPR+ ceasing to support unstructured addresses within ISO messages via a future schema change. This would mean that payments originating from PSPs in SWIFT would necessarily contain a structured address. For a longer list of external factors, please refer to the Policy Statement.

Benefit realisation

The Bank encourages the use of high quality enhanced data for all CHAPS payments, in order to ensure that the benefits of the ISO 20022 payment messaging standard can be realised across the payments industry as soon as possible.

After 2025

Our vision is to widen the requirement for Purpose Codes and LEIs to all CHAPS payments over time.

The Bank will expect the quality of data submitted to improve over time (and for CHAPS DPs to have plans in place to do so).

The Bank will provide industry with at least 18 months’ notice in advance of extending any mandatory requirements for enhanced data in CHAPS.

* (once CHAPS DP is capable of sending enhanced data)