Banks to guarantee six day cheque clearance

by Gill Montia

Story link: Banks to guarantee six day cheque clearance

From November 30th bank customers will be able to rely on cheques which have been paid into their accounts clearing within six days.

Currently, banks can reclaim money from a customer’s account if a cheque bounces or is a forgery.

The money can be reclaimed weeks or months after the event, leading to a situation whereby cheques never really clear with absolute certainty.

Following an airing of the subject on the BBC Moneybox programme, the Office of Fair Trading has put pressure on the banking sector to clarify its clearing system.

Overall incidents of cheque fraud have been decreasing, from £46 million in 2004, to £31 million in 2006.

However, the problem remains serious for certain groups of bank customers, such as business that hand over goods on receipt of a cheque.

Other groups commonly affected are those selling items on the Internet via ebay, or selling cars via Autotrader.

According to Apacs, the payment services organisation: “It’s only in the last few years that it has become an issue, due to organised gangs getting into cheque fraud.”

The changes at the end of this month mean that the banking sector is finally clarifying the maximum time for banks to credit cheque payments to accounts.

From 30 November, interest on a funds paid in by cheque will be credited after no more than two days and customers will be able to withdraw cash on funds paid in by cheque after no more than four days.