There are many mysteries in life. Where did we come from? Why do I always forget to take my bag for life to the supermarket? Why does the word lisp have an ‘s’ in it? And, in the name of all that is holy, why does it take up to six days to clear a cheque?
At least that last one is close to being answered – and solved. The Cheque and Credit Clearing Company (C&CCC), the organisation that manages the cheque clearing system, has today announced details of the launch of an industry-wide image-based cheque clearing system that will speed up cheque processing significantly for customers across the UK.
At present, cheques have to be physically transported back to the bank that issued them. While a number of banks, including Barclays and Lloyds, permit their customers to pay in cheques via pictures on their banking apps, this can only occur when the cheque is issued by the same bank.
I understand that paying in a physical piece of paper can never be as quick or efficient as an electronic transaction. But it beggars belief that we are still in a position where banks can take their merry time processing a cheque. Six days? Come on.
Hopefully this new clearing system will help. Under the plans, banks will be able to clear cheques by exchanging pictures of them. ‘Cheque imaging’ means the money will be cleared within one working day, a significant improvement on the current regime where, let’s be frank, clearing of funds is a lottery.
The new system will go live with some banks and building societies from 30 October 2017. Then, at some stage in the second half of 2018, it is hoped that all of the UK’s banks and building societies will clear all cheques via the image-based system to the faster timescale. The precise date as to when this will happen is yet to be confirmed by the industry.
For customers, the new system will mean that if they pay in a cheque on a weekday they will be able to withdraw the funds by 23.59 on the next weekday (excluding bank holidays) at the latest, with many banks and building societies likely to allow customers to access their funds earlier than this.
James Radford, chief executive of the Cheque and Credit Clearing Company, said: ‘These changes will put cheques firmly in the 21st century, delivering real and important benefits for the many individuals, charities and businesses that regularly use cheques. Not only will cheques clear faster but banks and building societies may offer their customers the option of paying in an image of a cheque rather than the paper cheque itself.’
Not long ago, the industry wanted to abolish cheques altogether. But MPs stepped in, saying many people relied on them, the older generation in particular. Last year alone, some 477 million cheques were written in the UK. That’s less than say, 20 years ago, but still accounted for £455 billion.
I’m in my 40s and I still use cheques on a regular basis. They’re useful for all manner of things, from paying the paper bill to sending money to older relatives who do not bank online. And if continuing to use cheques makes me an old duffer, then so be it.
Helen Nugent is Online Money Editor of The Spectator
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