-  From 30 November changes to the cheque clearing process come into effect
-  Changes to provide certainty and increased transparency for business and personal customers when paying in cheques

The UK banking industry has today (26 November 2007) announced the start date for changes to cheque clearing processes. The changes, known as 2-4-6, are a major development that will benefit anyone who accepts a cheque, banker’s draft or building society cheque.  The changes will apply on all cheques paid in to major banks and building societies in the UK with effect from this Friday (30 November) onwards. The changes will deliver two benefits for customers:

Increased certainty - For the first time, after paying in a cheque, customers can be sure that at the end of six working days, the money has safely cleared and they are protected from any loss if that cheque should subsequently bounce*.

Improved clarity about clearing timescales - The changes set maximum timescales for the day that customers can expect to earn interest, or when the balance on which overdraft interest is charged is reduced (no later than two working days after paying in a cheque). They also set maximum timescales for the day when money can be withdrawn (no later than four working days after paying in a cheque). Banks and building societies will still compete to offer services that beat these guaranteed limits.

In research commissioned by the Cheque and Credit Clearing Company**, less than a quarter of cheque users surveyed knew the correct timescales for cheque clearing, and more than half were worried about accepting cheques for fear they may bounce.

The 2-4-6 changes address these uncertainties, and provide guaranteed maximum time limits on cheque clearing to help businesses and personal customers decide how best to manage the cheque payments they receive. Angela Thomas, Cheque and Credit Clearing Company Managing Director, said:

“Although cheque use has fallen over the last few years, cheques remain important for certain customers in certain situations. Whether it’s a small business or someone selling a car, there are many occasions where cheques still get handed over. These changes will really benefit anyone paying in a cheque, offering them certainty and clarity on when the money has cleared and giving real peace of mind.”

Despite the positive change, the industry continues to remind customers to be wary of accepting cheques if they don’t know or trust the person offering them the cheque. Other options include CHAPS or making an online or phone payment. 

Any customer who is uncertain about clearing timescales for a particular cheque should check with their bank or building society.

To explain the changes, the Cheque and Credit Clearing Company and APACS have issued downloadable advice guides and a range of information for personal and business customers, available free from their websites, www.chequeandcredit.co.uk and www.apacs.org.uk.

These changes cover cheques, bankers’ drafts and building society cheques drawn on and paid into a UK current or basic bank account. For saving accounts the maximum time limit for withdrawal is longer (six days instead of four). Basic bank account holders are likely to be able to withdraw cash more quickly than before as a result of these changes. Small businesses will benefit from the certainty of funds for managing their cash flow, and for deciding when to release goods and services that are paid for by cheque.

*Unless they are a knowing party to a fraud
**Banking Omnibus Survey (TNS 2007)

ENDS

For further information contact the APACS Information Office:

T: 0870 420 3208 E: apacs@fourcommunications.com

1. APACS is the trade body that gives banks, building societies and card issuers a forum where they can work together on non-competitive issues. In a nutshell we help manage the way that businesses and individuals in the UK move their money around - this covers cash, credit and debit cards, cheques and automated payments such as direct debits, salary payments and online/phone transactions. We champion the fight against banking fraud and twice a year we publish figures on payment industry fraud losses.

2. The Cheque and Credit Clearing Company (C&CCC) is a membership-based industry body which manages the cheque clearing system in Great Britain. There are 12 members; eleven banks and one building society:

ABBEY NATIONAL

ALLIANCE & LEICESTER

BANK OF ENGLAND

HBOS (HALIFAX AND BANK OF SCOTLAND)

BARCLAYS BANK

CLYDESDALE BANK

The CO-OPERATIVE BANK

HSBC BANK

LLOYDS TSB BANK

NATIONAL WESTMINSTER BANK

NATIONWIDE BUILDING SOCIETY

The ROYAL BANK OF SCOTLAND

All members of C&CCC will be implementing these changes at the end of November.

3. The changes are also being implemented at the end of November by all members of the Belfast Bankers Clearing Committee. The BBCC represents the cheque clearing banks in Northern Ireland, which are Bank of Ireland, First Trust Bank, Northern Bank, and Ulster Bank.

4. The 2-4-6 changes were announced in November 2006, following work undertaken by the industry as part of the Office of Fair Trading Payment Systems Task Force’s cheques working group. All subscribers to the Banking Code have committed to implementing these changes.