Speeding up cheque payments legislating for cheque imaging

7th April 2014

Organisation

 
HM Treasury

Summary


Following pressure from the charity sector, Treasury Select Committee and the government, the banking industry reversed its 2009 decision to close the central cheque clearing system, and instead the banks agreed to provide cheque services for as long as customers need them.
Following pressure from the charity sector, Treasury Select Committee and the government, the banking industry reversed its 2009 decision to close the central cheque clearing system, and instead the banks agreed to provide cheque services for as long as customers need them.
The Treasury is now consulting on changing legislation to enable cheque imaging in the UK. The proposals would make cheque payments quicker and easier for end users, with a faster clearing cycle of two days and new options for depositing via smartphone. Of course, some charities prefer to, or are only able to, deposit cheques in branches, and the government wants to safeguard the needs of such customers. Therefore, the proposed legislation would also require that banks and building societies, where they have physical branches, must accept customers depositing cheques in branch and cannot force them to use only smartphone channels.

The government is committed to ensuring that the UK’s payment systems are innovative, efficient and reliable, and that they meet the needs of end users. Cheques continue to form a vital part of the British payments landscape, with nearly £840 billion of cheques processed in 2012, accounting for 10 per cent of all payments made by individuals.

CFG Comments

CFG welcome the development of a new image based cheque and credit processing model as it provides improved ease of use and sustainability for cheques an essential payment method for charities to receive donations. While we support this move to cheque imaging as an additional facility for cheque processing, it is important that HMT also maintain the current paper processing mechanism.

While we welcome this move by Government to innovate around payment mechanisms, we expect that take up of cheque imaging by charities is likely to be limited as charities will vary in their capacity to use the technology. This take up will depend on the size of their finance teams and their in-house ability to use smart phone technology.

We support maximising choice in payments systems and that any costs of such changes should not be borne by the end user. Therefore we believe that it is vital for charities to continue to deposit cheques at a bank counter if they need to, so they do not need to change their behaviour and bear any additional associated costs.


This consultation has now closed, you can find the response here.


For any further comments please contact Anna Bloch on anna.bloch@cfg.org.uk or on 0207 871 5477.

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