HM Treasury announced in December 2013 that cheque payments would be brought into the 21st century through a system known as image processing which will speed up cheque clearing timescales and bring other benefits to the people, charities and businesses that use cheques. The government is also extending the benefits of imaging to paper instruments other than cheques that are currently cleared using the same system. These other instruments are bankers’ drafts, postal orders, government payable orders, warrants, travellers’ cheques and bank giro credits used for bill payments (“other eligible paper”).
In April 2015 the Payment Systems Regulator (PSR) was launched as the new economic regulator for the payment systems industry in the UK. It is the regulator for the cheque and credit clearings operated by the C&CCC. The C&CCC’s objectives focus on competition, open access and innovation, closely mirroring those of the regulator. As part of this, the Image Clearing System (ICS) is being launched on 30th October 2107 with a phased roll-out using new technology enabling the faster processing of paper items.
The new system will revolutionise how cheques and other eligible paper are cleared in the UK and will not only help protect cheques for as long as people, charities and businesses wish to use them but will bring the UK paper clearing firmly into the 21st century.
About this consultation
As part of its work on introducing the ICS, the C&CCC, consulted with interested parties on several important documents ahead of the launch of the ICS.
This consultation exercise was a vital part of ensuring high standards of transparency, service user representation and open access for the new ICS.
Publication of Response
Following the conclusion of the consultation on the ICS Contractual Framework, the C&CCC considered each comment from the six respondents. For each comment, the C&CCC decided if changes were necessary to the ICS Contractual Framework, or if an explanation was required. In some cases due to the complexity of the response, it was necessary to engage with the respondent to understand the underlying issue better. Following these discussions it was determined if it was necessary to amend the ICS Contractual Documentation. In such cases, an explanation of the decision was drafted as well as the amendment to the documentation if necessary.
The C&CCC also received a number of comments from our regulators, which were considered in conjunction with those from other respondents. All amendments requested by our regulators were accepted.
All amendments and comments to respondents were completed by 11 July 2017. The key comments and amendments were as follows:
1. Settlement Finality Regulations and point of irrevocability
2. Record keeping period
3. ICS Manual – Definitions, Participant IDs and Excluded Payments
4. ICS Manual – Appropriation
Participants’ Terms & Conditions
1. Group entities and Ring Fencing
2. Capped indemnity
3. Anti-Money Laundering/Know Your Customer
The amendments requested by our regulators are mainly contained in the Deed of Charge and the Settlement Framework Agreement.