New research reveals that businesses and consumers are wrong when it comes to knowing when a cheque won’t bounce
New market research has found that cheque recipients’ understanding of how long they have to wait before they can be certain that a cheque won’t bounce, and that the money is safely theirs, is still very low.
Since 30 November 2007, customers have benefited from an industry-wide change which ensures that, six working days after paying in a cheque, the money is theirs to keep. This means that there is no chance of the cheque funds being reclaimed by the paying bank unless the customer is a knowing party to a fraud. Before this change, a cheque could have bounced weeks or even months after it had been paid it in, potentially leaving customers who had spent cheque funds out of pocket. This was one of a number of changes to the cheque clearing process known as 2-4-6[1].
Despite such a positive change, market research carried out on behalf of the Cheque and Credit Clearing Company has revealed that only 1% of consumers correctly know how long you have to wait before you can be certain that the money is yours. Worryingly, 79% believe that the cheque funds are definitely theirs earlier than they actually are. 15% are unsure or have no idea of when a cheque has safely cleared[2].
Businesses, for whom certainty is often more important because they may be waiting to hand over goods or services, fared equally poorly – only 2% correctly identified that you have to wait until the end of the sixth working day before you can be sure that the cheque funds are yours. 82% think that the timescale is earlier than six working days. 9% are unsure or have no idea of when a cheque has safely cleared.
It is particularly important that businesses are aware of the cheque clearing timescales given that on 30 June next year the Cheque Guarantee Card Scheme is being withdrawn, meaning that after this date businesses will no longer be able to accept a cheque guaranteed with a plastic card.
To help customers better understand when their cheque won’t bounce, and the other timescales involved, the Cheque and Credit Clearing Company provides an online tool on its website where customers can enter the date they pay in their cheque to work out when they can be sure that the money is theirs to keep. The checker is free to use at: www.chequechecker.co.uk.
Angela Thomas, managing director of the Cheque and Credit Clearing Company, said:
“Although only a tiny percentage of the cheques being processed every day are actually returned unpaid it’s still disappointing that so many people are unaware of when cheque funds are definitely theirs to keep. If anyone is unsure of the timescales involved I would urge them to look at the information on our website, or simply check with their bank or building society when they are paying it in.”
In addition to the cheque checker, there is a section on the 2-4-6 changes in a new, revised edition of Cheques and Cheque Clearing the Facts. This booklet, produced in co-operation with the Belfast Bankers’ Clearing Company, provides useful information and key facts about cheques including the clearing cycle and the 2-4-6 timescales. It is available to download from the Resources/Publications section of the Cheque and Credit Clearing Company website at www.chequeandcredit.co.uk.
ENDS
For further information contact 020 3217 8251.
Notes to editors:
1 The Cheque and Credit Clearing Company (C&CCC) is a non-profit making industry body, which has managed the cheque clearing system in England and Wales since 1985, and in all of Great Britain since 1996 when it took over responsibility for managing the Scottish cheque clearing. As well as clearing cheques, the system processes bankers’ drafts, building society cheques, postal orders, warrants, government payable orders and travellers’ cheques. The company also manages the systems for the clearing of paper bank giro credits (the credit clearing), euro cheques (the euro clearing) and US dollar cheques (the currency clearing for US dollar cheques drawn on London banks.
2 The 2-4-6 changes to the cheque clearing timescales
In an electronic age, people ask why it still takes three days to clear a cheque. The fact is, cheques still have to be returned physically to the bank on which they are drawn to be examined for fraud. This and other issues were addressed by the Cheques Working Group, which was set up in October 2005 by the OFT-led Payment Systems Task Force.
Their findings, published in the Cheques Working Group Report in November 2006, showed that customers did not understand the cheque clearing cycle and there was a demand for greater transparency and certainty of payment. There was, however, no business case for speeding up the cycle.
These conclusions resulted in recommendations for the settlement members of both the C&CCC and the Belfast Bankers’ Clearing Company to make changes to the clearing cycle by the end of November 2007. Under the Banking Conduct of Business Sourcebook (BCOBS) all banks and building societies are required to provide clear details of their policies, such as 2-4-6, to their customers.
The changes, implemented on 30 November 2007, are known as the 2-4-6 and 2-6-6 cheque clearing timescales. These changes have increased clarity and provided certainty for all elements of the cheque clearing process for customers paying in cheques to a UK current or basic bank account (2-4-6), or UK savings account (2-6-6).
The changes mean that customers start earning interest on money paid into their current, basic or savings accounts no later than two days after paying in a cheque. After no later than four days the money becomes available for withdrawal (six days for savings accounts).
The changes also mean that for the first time customers can be sure that, at the end of six working days after paying in a cheque, the money is theirs. The beneficiary customer is protected from loss if the cheque subsequently bounces, and the money cannot be reclaimed without their consent, unless they are a knowing party to a fraud.
These are only the maximum timescales – individual banks may and do compete on when they pay interest or allow funds from paid-in cheques to be withdrawn by offering these earlier than two and four days respectively.
3 The Cheque and Credit Clearing Company commissioned market research with 2,000 people, representative of the population, and 520 financial decision makers in representative businesses with turnover above £50,000.
The research found that:
· 1% of consumers correctly identified how long you have to wait to be sure that a cheque won’t bounce (at the end of the sixth working day after paying it in).
· 5% thought it was later than six working days.
· 79% thought it was earlier than six working days.
· 15% were not sure or had no idea.
· 2% of businesses correctly identified how long you have to wait to be sure that a cheque won’t bounce (at the end of the sixth working day after paying it in).
· 8% thought it was later than six working days.
· 82% thought it was earlier than six working days.
· 9% were not sure or had no idea.
* Percentages may not sum to 100 due to rounding.
[1] See notes to editors
[2] See notes to editors