Cheque delays must be reduced, say MPs

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Media captionSandra Quinn of the Payments Council says the council's turnaround on cheques was prompted by consultations with users

Cheques - until recently facing the threat of abolition - should be improved, according to MPs.

The "delays and uncertainty" that affect cheque payments should be reduced, said a Treasury Committee report.

In July, the Payments Council, which oversees strategy, withdrew plans to phase out chequebooks by 2018.

Now the MPs have called for the council itself to be overhauled, and a rethink on the end of cheque guarantee cards.

"The Payments Council is an industry-dominated body with no effective public accountability," said committee chairman Andrew Tyrie.

"It should not have unfettered power to take decisions on matters, such as the future of cheques, or other issues, that are of vital importance to millions of people."

But Gary Hocking, acting chief executive of the council, said the group did not believe extra regulation was needed, although a review on how it was governed had already been planned before the end of the year.


In December 2009, the Payments Council set the target date of 2018 for the phasing out of cheques.

It was planning to make a final decision in 2016, but in July this year it ruled out the abolition following a public backlash, a campaign from charities and a rough ride in front of the Treasury Committee.

The initial plan had caused "great and unnecessary concern" among bank customers, according to the committee's report, which has just been published.

It said the banks must now guarantee a strong future for cheque use.

"The banks have on occasion given the impression to their customers that the end of cheques was a foregone conclusion," the committee's report said.

"The Payments Council must ensure that banks do not in the future attempt to abandon cheques by stealth, or deter customers from using cheques."

Instead it should work behind the scenes to improve the cheque clearing system, making it quicker and cheaper, the report said.

Royal Bank of Scotland said it was committed to providing cheques for as long as customers said they needed them.

Coutts, which provides banking for high-value clients, said its customers wrote one cheque a week on average and it welcomed the continuation.


The saga over the planned abolition of cheques reflected a lack of transparency in retail banking, according to the Treasury Committee. It made a number of other recommendations including:

  • Banks being told to write to customers stating cheques will be in use for the foreseeable future
  • An overhaul of the board members of the Payments Council, including greater powers of veto for the independent members
  • A rethink of the abolition of the cheque guarantee card.

The cheque guarantee, denoted by a Shakespeare hologram on a card, meant a cheque was honoured by a bank, even if sufficient funds were not in an account. This system ended at the end of June.

Mr Hocking, of the Payments Council, said the scheme's decline was "entirely driven" by businesses and consumers.

"Its closure was agreed to provide clarity and prevent customer confusion and does not stop businesses accepting cheques," he said.

However, consumer groups have echoed the call for a rethink.

Watchdog Consumer Focus described the withdrawal of the scheme as "short-sighted".

Michelle Mitchell, charity director of Age UK - which campaigned for the future of cheques, welcomed a review.

"It is a chance for banks and building societies to live up to their word and prove that the future of cheques is safe," she said.

"Cheques and other payment systems are essential services upon which the public relies - just like the provision of water and electricity.

"Their future must not be left solely to the banking industry and its representative bodies to determine."

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