Banks forced to cheque themselves
All banks and building societies will be forced to pay interest on money paid by cheques after two working days
By David Field
We all know the feeling of paying money in by cheque. Those nail-baiting four to five working days (or sometimes more), waiting for the cheque to clear so you can have that cash in your bank account, ready to spend.
It can be an absolute nightmare to say the least, especially when you need that cash pronto for that month's mortgage payment or indeed for credit card bills that need paying before you are slapped with a hefty late payment penalty.
This spells great news for UK consumers, meaning we will no longer have to wait for what seems like an eternity to have our cheques cleared.
Consumers will also be able to withdraw the money after four days if the cheque is paid into a current account and will be guaranteed that after six days the cash is theirs - even if the cheque ultimately bounces.
The changes in the rules come after an investigation by the Office of Fair Trading (OFT) into the cheque clearing cycle and will come into force as soon as the end of this week.
Although cheques are increasingly becoming a less popular method of payment - with the number of credit and debit card transactions continuing to soar - as many as 270 million were written by UK consumers in the third quarter of this year.
With UK entrepreneurship and the number of small and medium-sized businesses rising sharply by the year, more people are working for themselves. This means that without the vast supplies at the disposal of human resources departments of larger companies, they have to pay their staff by cheque.
Add to this the growing number of migrant contract workers from eastern Europe, there are more and more people who will benefit enormously from this change of rules.
The change will also make the cheque handling system more cohesive and unified than it was before. At the moment banks can set their own timescales for clearing payments. This often leads to confusion among customers, who are faced with hugely varying systems across the major high street banks. It can also cause problems for business-owners and their clients whose banks may use conflicting systems.
Research by the Cheque and Credit Clearing Company, which represents 11 banks and one building society and which drew up the rules with the payments body Apacs, found that less than a quarter of customers knew how long it took for a cheque to clear after they had paid it in.
Angela Thomas, managing director of the Cheque and Credit Clearing Company, said: "Although cheque use has fallen over the last few years, cheques remain important for certain customers in certain situations.
"These changes will really benefit anyone paying in a cheque, offering them certainty and clarity on when the money has cleared and giving real peace of mind."
