Professional Documents
Culture Documents
Cheques The Facts 2012
Cheques The Facts 2012
The Facts
A guide to cheques and the UK cheque clearing system
01
Contents
Introduction
Introduction
Contents
Cheque fraud & prevention
04 History
20 General FAQs
52 Glossary
63 Useful contacts
Cheques
& cheque
clearing
Cheques &
cheque clearing
03
History
They are not legal tender but are legal documents and
their use is governed by the Bills of Exchange Act 1882,
and the Cheques Acts of 1957 and 1992.
05
Cheques
& cheque
clearing
07
Cheques
& cheque
clearing
Cheques
& cheque
clearing
09
Cheques
& cheque
clearing
11
13
**Individual banks may compete on when they will allow funds from
the cheque paid-in to be withdrawn; customers should refer to the
terms and conditions of their account.
Cheques
& cheque
clearing
Cheques
& cheque
clearing
15
17
How do I know when the sixth day after deposit has been
reached? Do the six days exclude non-working days?
Cheques
& cheque
clearing
19
Why dont all banks allow access to funds on the same day?
The industry has set maximum timescales for clearing
cheques and these include the day by when banks must
allow withdrawal of the funds (four days after paying in
the cheque) but this does not prevent banks beating
those timescales with their own competitive offerings.
Cheques
& cheque
clearing
General FAQs
Cheques
& cheque
clearing
21
23
are over six months old to protect the payer, on the basis
that payment may already have been made by some
other means or the cheque may have been lost or stolen.
However, this timeframe is at the discretion of individual
banks. It should not be assumed that cheques in excess
of six months old would automatically be rejected the
only certain way to cancel a cheque is to request that a
stop be placed on it. It is recommended that, if possible,
customers in possession of cheques that are over six months
old obtain a replacement. In case of disputes, a cheque
remains legally valid to use to prove a debt for six years.
Can I post-date a cheque?
Banks set their own policies on post-dated cheques
and, in many cases, their account terms and conditions
state that customers should not write them. If the
beneficiary of a post-dated cheque attempts to pay it
into their account prior to the date shown, it may either
be returned unpaid, possibly incurring charges for both
Cheques
& cheque
clearing
25
Cheques
& cheque
clearing
Facts, figures
& advice
Facts,
figures &
advice
27
Facts,
figures &
advice
29
1113
970
2010
2011
1282
1403
1600
1931
2005
1778
2088
2004
2251
2394
2567
2702
2988
1998
2859
3091
3203
1996
1997
3283
1995
2009
2008
2007
2006
2003
2002
2001
2000
1999
0
1994
O
ver the last ten years business cheque volumes
have decreased by more than a half.
1993
B
usiness cheque use peaked in 1997 and has
since declined as businesses increasingly move
to automated payments.
1000
1992
O
nly 2% of retail spending by value is still paid
by cheque, compared with over 70% by debit
or credit card.
2000
1991
O
f a typical days cheque clearing in 2011, more
than half were written for less than 100 and 25 had
a value in excess of 1 million.
1990
O
nly one in fifty regular payments was made
by cheque in 2011, compared with one in ten as
recently as 1998.
3430
3000
3559
3728
3882
4000
3900
31
Facts,
figures &
advice
3976
1989
Facts,
figures &
advice
33
B
e aware that if you decide to withdraw funds or
release goods before the end of the sixth day after
paying in a cheque there is a risk that the money
could be reclaimed by your bank if the cheque is
B
e aware also that if you are a knowing party to a
fraud your bank or building society may recall funds
paid in by cheque from your account at any time.
Cheque
fraud &
prevention
Cheque fraud
& prevention
35
Cheque
fraud &
prevention
37
C
&CCC has arranged for Smithers Pira International
to carry out tests on non-impact (mainly laser)
printers with a view to establishing the quality of print
adhesion to cheque paper. (Better print adhesion
significantly reduces the chances of cheques being
fraudulently altered.) The machines that achieve the
required standard of adhesion are categorised as
Smithers Pira Grade 1 printers and it is these which
bank customers are recommended to use.
A list of CPAS members, and a list of recommended
laser printers (the Pira list) can be found in
the Cheque and Credit Printing section of
www.chequeandcredit.co.uk
Cheque
fraud &
prevention
39
41
Cheque
fraud &
prevention
43
M
ake sure you use an approved model of laser printer
to infill cheques. Information is available in the Cheque
and Credit Printing section of the C&CCC website.
Carry out regular audits on all your bank accounts.
Cheque
fraud &
prevention
E
nsure that you always use an accredited cheque
printing company to produce your cheques. Information
is available at the Cheque Printer Accreditation
Scheme section on the C&CCC website.
45
It means you know about the fraud and were one of the
people involved in perpetrating the fraudulent transaction.
If a cheque is found to be fraudulent after the end of the
sixth working day after a cheque has been paid in, you
are protected and can keep the funds from the cheque
provided you are not a knowing party to fraud. Each
case would be looked at on an individual basis and the
Cheque
fraud &
prevention
the cheque has been paid into. If the cheque has been
fraudulently altered the person or company that sent you
the cheque should be able to recover the funds from
their bank and issue you with another one.
If the situation is not resolved to your satisfaction you can
refer the issue to the Financial Ombudsman.
I have been asked to write a cheque but leave the
payee blank, is this a good idea?
You should never sign a blank cheque. If it is completed
and paid into an account other than the one you
intended you could be liable for any loss.
I think that I have been the victim of fraud, what should I do?
You should contact your own bank immediately and
explain the situation. All disputes are looked at on an
individual basis, and you can seek redress through
your bank or building societys own formal complaints
procedure. Under BCOBS (the Banking Conduct of
Business Sourcebook) all banks and building societies
are obliged to tell their customers how to go about
this. Failing a satisfactory resolution, you can refer
your complaint to an independent assessment by the
Financial Ombudsman Service.
Further
information
& contacts
Further information
& contacts
47
49
Further
information
& contacts
51
Further
information
& contacts
Glossary
2-4-6 and 2-6-6 cheque clearing timescales
These are the maximum timescales for clearing cheques,
implemented by UK banks and building societies.
2-4-6 covers sterling current and basic bank accounts
and business accounts. It has given customers maximum
clearing timescales and increased transparency
providing clarity and certainty when paying in a sterling
cheque issued by a UK bank. It refers to 2, 4 and 6
working days after a cheque has been paid into a
current or basic bank account:
The start of the 2nd working day is the maximum
timescale for clearing for value (see glossary).
The start of the 4th working day is the maximum
timescale for clearing for withdrawal (see glossary).
Beneficiary
The person or business to whom the cheque is payable.
Another term meaning the same is payee.
Beneficiary bank
The bank that provides the account for the payee of
the cheque.
Bounced
Customers often use this term, whereas the bank refers
to a cheque being returned unpaid.
CHAPS payment (www.chapsco.co.uk)
A guaranteed electronic, irrevocable same-day value
sterling payment (formerly known as a telegraphic
transfer) for use in the UK. It is often used for large
purchases, for example when buying a house. There is
usually a charge for the service.
Further
information
& contacts
53
55
Collecting bank
Further
information
& contacts
*The credit clearing processes bank giro credits (BGCs) which are
used by customers to pay cash or cheques into a bank account. A
BGC is not a payment instrument, i.e. it cannot be used on its own
to make a payment, and must be accompanied by cash and/or
cheque - so the use of bank giro credits tends to follow any trends
in the use of cheques and cash as a method of payment. More
information about the credit clearing is on the C&CCC website.
Further
information
& contacts
Paying bank
57
59
E
ngage with the full range of stakeholders through
user forums, our newsletters and advice guides, and
M
anage the Cheque Printer Accreditation
Scheme (CPAS).
The objectives of the company are to:
Maintain the integrity of the clearings in a declining
market, responding proactively to changes in the
business and regulatory environments.
F acilitate innovation in the clearing process that
delivers improvement in efficiency or an improvement
in the customer proposition.
M
aintain a trusted centre of excellence and experience
in the cheque and credit clearings, providing thought
leadership on cheques to the payments industry.
E
nsure that members comply with the rules, standards
and procedures.
Cheque Printers
Accreditation Scheme
Agency banks or indirect clearers
To be eligible to be an agency with indirect access to
the GB cheque clearings through one of the settlement
members, an entity must be a payment service provider
under the Payment Services Regulations.
Some 400 banks, building societies and other payment
service providers, such as authorised payment institutions,
have access to the GB cheque clearings through agency
arrangements with one of the settlement members.
An entity wishing to become an indirect clearer makes
the necessary contractual arrangements directly with the
member concerned. The C&CCC does not get involved
with these commercial arrangements.
Further
information
& contacts
61
The Belfast Bankers Clearing Company (BBCC) is a nonprofit making, industry body, which was set up in 2007 as
a means of formalising the existing rules and standards
for the sterling cheque clearing and euro cheque
clearing in Northern Ireland. Previously these rules were
monitored on an ad-hoc basis by the BBCC.
press@paymentscouncil.org.uk
63
65
www.bbccl.co.uk
Payments Council
General enquiries
T: 020 3217 8200
www.paymentscouncil.org.uk
Further
information
& contacts
BWC285711/12