By Dan Ilett, 8 November 2005 15:50
NEWS
The Office of Fair Trading (OFT) is to scrutinise the way cheques are cleared as part of an investigation into whether faster transaction times are necessary.
The OFT's Payment Systems Task Force will publish a report on their findings next summer.
The move could spell a turnaround in policy, as in May the OFT said UK banks would have to change their IT infrastructures to accommodate faster transactions by 2007.
At that time the group agreed that online, telephone and standing order transaction times would be cut to a maximum of 24 hours.
The task force, formed in 2004 to deal with competition issues between firms, is made up of banks, consumers and business groups. Members include Bacs, the Bank of England and the Association of Payment and Clearing Systems.
Comments
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1. Andrew McQueen
It's a constant source of irritation and suprise to me that the banks have been able to get away with using our money for free for 3-4 days every time a cheque transaction takes place. Surely this archaic practice of boosting their profits at our expense will be removed now?
It's legalised theft in my view.
2. misceng
Banks have always tried to justify the delay because of the time to physically move the cheque. The practice is still followed even when a transfer is done over the internet from one online account to another. There is no possible excuse for this and it could be stopped almost immediately so why are the banks being told they have till 2007 to effect the change. I believe the transaction is sent to BACS and processed overnight so the banks computers know of the completion of the transaction by dawn the next day.
My additional complaint with banks is that they always process a withdrawal before they process deposits so that they can add charges.
3. David Wright
Frankly I'd accept the current delay IF it meant that the cheque once cleared was guaranteed genuine by the bank. But I'm hearing more and more stories of people swindled out of goods paid for by a cheque that cleared, but was later cancelled by the bank when they found it was fraudulent.
Banks should be made to bear the loss when this happens, perhaps in exchange for still taking 3 days to validate that the cheque really is valid.
Otherwise people will stop accepting cheques altogether - as some have already.
4. anonymous
misceng has a very valid point.
My BS charged me over £100 for being 'overdrawn' because some withdrawals (DD's) were attempted before the cheques I had paid in cleared... 5 seconds later they credited the cleared cheques to my account.
Thieving b@st@rds is what I call them...
5. Richard Davies
What they are doing is legalised theft.
Who else could take your money and make profit for themselves with it for 3 days and then give you it back with no interest etc. You could wrap electronic data around the world many times in 3 days!...it should take no longer than 24 hours for any electronic transaction. Banks make enough money anyway and it seems none of their procedures are customer friendly.
My bank charges me £20 to tranfer money electronically the same day which is stupid...why they are allowed to hold us ransom like this I have no idea.