Five-day Cheque Clearance “too long” say Treasury Committee
Banks and the UK Payments Council must work together to speed up cheque processing so they take less than five days to clear, the Treasury Select Committee has said.
An inquiry by the House of Commons Treasury Select Committee supported the recent decision by the Payments Council to retain cheques, but said that it must work with banks to process cheques faster than the five day average.
A Committee spokesman said it wanted to see banks improve their internal administrative procedures in order to reduce the length of time it took for cheques to clear, but that no time frame had been specified.
Forum of Private Business spokesman Phil McCabe said that faster clearance times would be a very positive move.
“It would make a real difference for small firms if funds were to clear quicker because of more efficient processing. Many businesses struggle to balance their cashflow and this is likely to make life easier for the thousands of small firms who receive cheques from customers.”
Improving cheque security, and reducing the uncertainty over when funds become available in the payee’s account, would also be beneficial, he added.
The Committee’s recommendations come one month after the Payments Council announced its decision to scrap plans to phase out cheques by 2018. The Council has confirmed that cheques will continue for “as long as customers need them”.
Banks too, have been warned by the Committee that they must not attempt to abolish cheques “by stealth” or deter customers from using them
Last year approximately 1.1 billion cheques were written, of which around 493 million were paid out by businesses. While popular with consumers and small firms, cheques were often seen as an administrative burden by banks.