By Dan Ilett, 14 November 2006 16:35
NEWS
Banks could soon be under pressure to follow new standards to speed up the time it takes to clear a cheque.
Under proposals made by the Office of Fair Trading's Payment Systems Task Force, consumers and businesses will be able to withdraw money deposited by cheque into current accounts no later than four working days after the cheque is deposited.
The reforms, which include being able to access funds faster, will take effect from November 2007 in a bid to improve customer experiences of the cheque-clearing system.
A report published today by the Cheques Working Group, led by the OFT, found there is no case for a complete rebuild of the cheque-clearing system.
Government research has found the number of cheques in circulation is falling by around eight per cent per year, and this rate of decline is likely to increase substantially when a new, faster payments service becomes available in November 2007.
Several major retail groups are now declining cheques as a payment mechanism.
The move comes as Ed Balls, economic secretary to the Treasury, said that a new, independent governance body for payment systems called the Payments Industry Association would take over from the OFT after December.
Comments
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1. anonymous
I do not see why the banks cannot be forced to clear cheques to allow drawing the following day - Lloyds TSB are advertising this for Cheques of less than £1000.
There is nothing more annoying than having a cheque paid in to your account and then having to wait 10 days for you to have access to YOUR money.
The banks make too much profit already!
2. Chris Grey
My main concern is that an incoming cheque can seem to clear, but then be taken away by the banks. Once the money is posted to my account, it should not be snatched away again, even if the whole process takes a little longer.
3. Richard A
Never mind cheques, what about electronic funds transfers? Why are they not instantaneous?
How can the money disappear from my building society on the day I make the transfer but not be avaiable in my bank account for 5 days? Where does it go (as if we didn't know)?
If it comes from a trusted partner (like a high street building society) why the wait? Transfers can only be made when money is in the account; the delay is unnecessary - except that banks worldwide make billions for their shareholders this way.
Cheques will soon be all but irrelevant, used only for minor transactions between private individuals. They have had 100 years to sort them out and yet only start clearing instantly in the dying years of the cheque's history. Whoopee!
4. misceng
I initiate a transfer from an online account on day 1 it is processed by the computer instantaneously and normallyprocessed by BACS overnight. It is then available to the recipient account not later than the next morning. The total cost of the transfer is microscopic but that does not stop the recipient bank from milking the better part of a week's interest before making the funds available. This is I feel excessive since neither bank did any manual work on the transaction unlike cheques.
5. Simon
Interesting to see a headline in the papers today warning that many banks are likely to start charging again - the end of the free accounts ? So they giveth with one hand, and taketh away with the other !