APACS, the UK payments association, today (14 November 2006) welcomes the announcement by H M Treasury that the Office of Fair Trading’s Payment Systems Task Force is to be wound up.

Today’s announcement brings two significant changes:

• creation of a new strategic governance body for UK payments, to facilitate wider consultation with non-bank stakeholders; 
• changes to cheque clearing processes to provide increased transparency and certainty for customers.        

This announcement reflects the industry’s positive response to the Task Force that most notably included the industry’s commitment to deliver a new faster payments service for internet and telephone payments from November 2007.

The new strategic Payments Industry Association

This new body will set the future strategic direction for payments: promoting innovation whilst supporting its continuing objective to preserve and enhance the integrity of payments systems.  The Payments Industry Association will officially come into being in 2007 on a date to be agreed by its new independent Chairman and stakeholders.

Mark Fisher, Chairman of APACS, said, “The UK banking industry has proven that it can continue to deliver stable, highly competitive, innovative payments systems without the need for further regulation, and the creation of this new body will allow greater consultation and transparency than ever before.  It will drive forward a strategy for payments in the UK.

“The Task Force brought together a wide variety of bodies with an interest in the efficiency and reliability of payments and we will now build on this successful formula. We want to ensure that the central payment schemes - through which payments are made - help providers innovate and deliver the best possible service to all business and personal customers.

“I am delighted that Brian Pomeroy has agreed to be the first Chairman.  He brings an external and independent perspective to developments in the payments arena which I am sure will mirror his approach and commitment to the financial inclusion agenda.”

Brian Pomeroy said:
"This new body will manage and deliver a national strategy for payments in the UK and I look forward to this new challenge.  Before the formal launch, I will be ensuring that the Board has top quality banking and independent representatives in place to ensure that its work is taken forward effectively.”

The work of the Payments Industry Association will be transparent with published procedures for consulting with the users of any particular payment system; and disclosing research and cost benefit analysis for any innovation proposals.  It will also publish a national payments plan.

It will include four independent non-banking directors, alongside eleven senior bank executives, as well as the independent Chairman.  The independent directors will collectively have the power to veto proposals.

Changes to cheque clearing processes

Working hand-in-hand with the OFT Payment Systems Task Force’s cheque working group, the UK banking industry today announced significant investment in cheque clearing processes over the next 12 months to provide increased transparency and certainty for customers who use cheques.  All the changes will come into effect in November 2007 – and the key changes will be recommended for inclusion in the next edition of the Banking Code due out in March 2008.   

The key benefit is for customers who accept cheques. For the first time a customer can be sure that after six working days funds cannot be reclaimed as may have happened in the past – typically if the cheque turns out to be fraudulent or if it turns out there are insufficient funds in the payer’s account. Despite this 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 or bankers’ drafts – particularly if they are of high value. Other options include CHAPS, an automated payment via BACS or the new faster payments service from November 2007.

The other significant change is that maximum time limits will be set for all component parts of the cheque clearing.  All these changes are explained in a new guide Cheque Changes Explained.

The cheque working group concluded that there is no case for a complete rebuild of the central cheque system particularly as their use continues to decline year-on-year, and many customers write cheques to benefit from the few days delay before money is taken from their accounts. The decline in cheque usage is expected to accelerate from November 2007 when the new faster payments service, developed by the banking industry, will give customers an additional alternative to cheques providing near real-time phone or internet payments.  

ENDS

For further information contact the APACS press office:

Email: press@apacs.co.uk

Sandra Quinn, Director of Corporate Communications
Tel: 020 7711 6234
Mobile: 07768 044656

Jemma Smith, Head of PR
Tel: 020 7711 6340
Mobile: 07811 113075

Mark Bowerman, Communications Executive
Tel: 020 7711 6251
Mobile: 07799 627256

Simon Bennett, Press Officer
Tel: 020 7711 6316
Mobile: 07795 620462

Notes to Editors

• The new Payments Industry Association will provide a strategic governing body for APACS and the clearing companies (including BACS Payment Schemes Limited, CHAPS, Cheque & Credit Clearing Company and LINK).

• Brian Pomeroy was formerly Senior Partner of Deloitte Consulting and now holds a number of public, voluntary and private sector appointments.  He is Chairman of the Treasury's Financial Inclusion Taskforce, a member of the National Lottery Commission (having been its Chairman in 1999/2000 and 2002/03) and a member of the Audit Commission.  He is also a member of the Financial Reporting Review Panel, a director of the Social Market Foundation and a trustee of the Money Advice Trust.

• The Cheque and Credit Clearing Company is responsible for the bulk clearing of cheques and paper credits throughout Great Britain. Cheque and credit payments in Northern Ireland are processed locally.  Members of the Cheque and Clearing Company are individually responsible for processing cheques drawn by or credited to the accounts of their customers. In addition, several hundred other institutions provide cheque facilities for their customers and obtain indirect access to the cheque clearing mechanisms by means of commercially negotiated agency arrangements with one of the full Members.   The Cheque and Clearing Company Limited is an autonomous company but outsources its staffing and resource requirements to APACS (Administration) Limited.

• Each working day 5.3 million cheques and credits pass through the GB interbank clearing. Cheque volumes reached a peak in 1990 but usage has fallen since then, mainly owing to increased use of plastic cards and direct debits by personal customers. However, cheques remain popular in the business sector for paying suppliers.  Overall cheque volumes will continue to fall and by 2015 APACS forecasts there to be only 2.4 million cheques written per day.