Through the new Payments Industry Association, access, innovation and governance in the cheque industry should be improved and benefit customers.
Jonathan May, the Office of Fair Trading’s chairman of the Payment Systems Task Force, which is also involved in the reforms, said: “The creation of the Payments Industry Association is good news for both consumers and businesses.
“The task force welcomes the agreed changes to the cheque clearing system, which will lead to much greater transparency, clarity and consistency for customers.”
Proposed changes the task force wants to see include interest being earned on cheques no later than two working days after being deposited and consumers having access to the funds within four working days.
“Financial institutions will not be able to take money deposited by cheque back out of an account later than six working days after deposit (‘guaranteed fate’), unless the payee is a knowing party to fraud. Currently, there is no maximum time limit for fate in the UK,” added the task force.
If implemented in a new banking code in 2008, it should help people better manage their debt by earning interest on cheques sooner.