/ Money

We need an independent review on scrapping cheques

Close-up of cheque and pen

From the strength of opinion here on Which? Conversation, we know that abolishing the cheque is unpopular, so it’s good that the enquiry’s been reopened. But we need to take it further and have an independent review.

Every time we mention cheques in our Conversations it shows just how popular they still are. It also shows us the strength of feeling that exists against the abolition of the cheque.

Well, it seems those folks at the Treasury Select Committee may read Which? Conversation as they have re-opened their enquiry into the abolition of the cheque.

The consultation so far…

At is stands, the decision to abolish the cheque will be made by the Payments Council. They have held lots of consultations and worked with a huge range of stakeholders, (including Which?) to:

  • Analyse where cheques are still used.
  • Assess what impact, if any, abolishing the cheque may have.
  • Come up with alternative payment methods that could be introduced.

This has been a very collaborative process and we are happy to be a part of it. However, the decision on whether or not to abolish the cheque will still ultimately be made by the Payments Council.

Their decision-making process is largely dominated by industry. This can often mean that vital interests of consumers, such as Faster Payments, are not properly pushed forward. So I have to question whether the Payments Council can ensure that adequate cheque substitutes are in place if, and when, the cheque is phased-out.

Why we want an independent review

The final decision to abolish cheques should be taken out of the hands of the Payments Council and instead it should be made following an independent review. This should consider whether the proposed alternatives to be in place by 2018 are suitable, cost-effective, accessible and safe to use for consumers.

We’re not wedded to the cheque, and understand the arguments behind scrapping it. But it would be foolhardy to scrap the cheque unless suitable replacements are in place – and an independent review would be the best way to do this. What do you think?

Comments

It is very difficult to make a mistake with the payee’s name when using a cheque but with new technology methods of payment which consist only of numbers a mistake can be very easily made and whoosh off via the ether goes your payment to someone else. At the moment there is no obligation for the recipient to return this erroneous receipt and if they fail to do so when asked then the only recourse is to take them to court. You would almost certainly win your case but if the money has been spent then you would be unlikely to recover it despite any court ruling.

It is easy to see the people who are in favour of the abolishment of cheques are all capable of going out and visiting shops and businesses and banks themselves. Anyone who has mobility problems and pays tradesmen by post or personally finds cheques necessary. Why should we make things easier for the Banks? They certainly haven’t made things easier for O.A.P’s.

Peter says:
10 June 2011

The ban on using cheques has already started in the High Street.Our local co-op has stopped accepting cheques because the banks are no longer honouring the old bank guarentee card.Despite the concerns of the older generation it appears inevitable that the banks will get their way eventually with cheques no longer being used.

Molly says:
10 June 2011

If cheques are to be abolished it is absolutely vital that a suitable, reasonably priced alternative be worked out to take their place. We have a population which is rapidly becoming weighted in numbers towards the elderly, with the specific problems that this will create. If you reach the age of 78, live alone and become housebound, which is my present situation, then the problem of how to make payments in a chequeless society may be better understood.
I make many purchases on line, by ‘phone and by bank transfer very happily but these methods will only work if the person to whom the payment is to be made has the means to receive it. For example, I pay my cleaner and my gardener by cheque because they have no means of processing my debit card. I cannot pay them in cash because, being housebound, I cannot get to shops or cashpoints to acquire any cash. Even much larger sums are paid in cash, again, for example: I recently had my bathroom refitted for the sum of approximately £3500. The fitter had the means of processing a debit card at his showroom but I couldn’t get there, neither would I give him my card and pin number to take away – so a cheque was made out and accepted. Please think more carefully before glibly saying that we do not need cheques.

Jackie says:
10 June 2011

As a main carer for someone who is house bound, elderly, unable to use a computer, is deaf so can not use telephone banking, but needs shopping, bills paying etc.The only option for her are cheques, so what alternatives do you suggest for her without her giving up her financial control and getting a power of attorney?

I’ve posted a couple of remarks further up in response to Julian’s rather arrogant and selfish points.

In some ways I’m as bad as Julian for sinking to his level and making such remarks.

However, let’s take right out of the equation for now any personal feelings, ill-thought through, arrogant or otherwise, and let’s just consider some indisputable facts which are amply illustrated on this convo and the two that preceded it:

1) There is an overwhelming majority of people who do not want to see the banks get rid of cheques.
2) There are a great many circumstances where the alternatives currently on offer, and all that I have heard suggested for future introduction, are simply unworkable.
3) We are all complete fools if we consider only the here and now and forget to consider the future: Julian and I might both be fit and agile now, we may have all of our faculties about us and we may be able to adapt to new systems, but when we are older (and perhaps wiser?) we too may be in a situation where we cannot use any of the alternatives. We have a duty to consider those less fortunate than ourselves and if anyone feels like asking “why should I?” they need to remember that one day we too will be those older people and that one day, possibly tomorrow, we too could be those less able people.
4) very sadly the last indisputable fact I will mention is that the Banks will always win: even if (and I doubt this very much) they are forced to retain cheques against their will, they will find ever-increasing ways to make increased (and increasingly obscene) profits, whether that is by charging even more to process cards (to cover their so-called losses on cheques) or by any other means, they will win. The government should have let them collapse 2 years ago – it would do the bankers a lot of good if many more of them found themselves in the position that Lehmann’s employees did.

John Anderson says:
11 June 2011

Moving away from paper cheques seems to be a sensible idea to me PROVIDED what is put in place is easy to use, robust and secure. I would prefer electronic method every time, less paper, less post and easier to use. I say that incidentally as someone who has used cheques for the last 50 years!

WHB says:
11 June 2011

It isn’t only businesses and/or individuals that will suffer with the withdrawal of cheques many thousands of charitable organisations will also. I recently needed to purchase pull-up display from Staples for a National well known charity but they wouldn’t accept a cheque – they haven’t accepted cheques for over 4 years – I had to pay for the item with my personal Visa card and then reclaim from the charity fund. This was very inconvenient and not condusive to good charitable fund accounting. If cheques are phased out then charities would have to have some form of payment card which would take away the safe-guard of having a minimum of 2 signatories to sign cheques which could leave charitable organisations vulnerable to possible fraud by unscrupulous people becoming charitable fund treasurers.

I do not see a need to retain cheques. I have bank accounts in several other EU countries eg Belgium and Netherlands as well as in Switzerland. I have a plastic debit card on each and on line access to each. Cheques are not provided. I get along quite happily in each country without cheques. Why not then in the UK? I dont have a chequbook on my Coop Band SMILE account.

James Moody says:
11 June 2011

It is my very definite view that the service provided by cheques cannot be adequately replaced
by on line and other paperless procedures. Banks have offered the cheque service for many
years and should continue to do so. I know that this opinion is shared by the majority of my
circle of aquaintance

Dick D. says:
11 June 2011

If Which is campaigning for the retention of cheques, why was I not given the opportunity to pay my Which subscription by cheque this month. I do not like making payments by ‘phone!

Hi Dick, sorry to hear your concerns. I’ve spoken to our customer services department who’ve told me this:

“We can only accept cheques for subscriptions paid annually because the administration costs associated with monthly or quarterly payments are too high. As a not for profit organisation, we have to ensure that we limit these costs. The Customer Service Team can help if you want to change your subscription and pay annually, by cheque. You can call them on 01992 822800 (M-F 8.30am to 6pm, Sat 9am-1pm)”

I hope this explains our situation a bit better.

Independent inquiry equals waste of money. Cheques may be old fashioned (so is money for that matter, but we still use it globally) but they work. For all the reasons written above there is only one way to send money to someone/charity/club (without electronic gadgetry), safely… that’s by cheque. The Government should simply tell the banks to stop messing around and provide a proper financial service to Jo Public. They should also condemn surreptitious moves (no cheque guarantee cards) to remove cheques by the back door. When someone invents a cashless society, cheques won’t be necessary. Not in my lifetime I suspect.

Andrew Walter says:
11 June 2011

As a carer for my 94 year old mother, I notice that she writes many more cheques than I do. She pays her gardener, plumber, electrician, carpentry-repair man and other traders and charity one-off donations this way, as she cannot move easily from her house. She is too old to get to grips with new technology. Fundamentally a cheque is simply a written instruction from me to the bank to transfer money to a.n.other person. I recently had to close an HSBC savings account that had run its course, and the only way I could was by writing a letter – this function was not available on-line. That’s a paper instruction, and banks are always going to have to accept signed paper instructions. That’s all a cheque is. I myself still use cheques to pay one-off charities, wedding-presents, and these are occasional items. I see no reason for banks not to maintain the existing cheque clearance system; if newer payment systems evolve that can replace cheques adequately in all cases, then cheque use will end naturally; that’s the time the paper-cheque system can be abolished, not before. I believe there will always be a need for a system where I can spontaneously pass potentially large lumps of money from me as a present to a.n.other person that I identify on paper – electronic gifts just don’t cut it for me. I want to see and feel it – I want the personal touch.

Security-wise, there’s nothing to stops banks printing a greyscale photo of the account holder on the back, and this could be beefed up by printing a 2D barcode of the same image that’s public-key signed using the banks own public key. This would enhance security by identifying the issuer of the cheque in a way than could be checked using any scanner, even a modern phone could have an app to decode such 2D barcodes to confirm the image is genuine. Wouldn’t prevent all cheque fraud of course, but would allow banks in distant towns, when given a “pay cash” cheque, to at least see if the recipient looks anything like the owner of the account, and query the transaction if not.

I am an independant retailer and involved in cashing third party cheques for my customers. They do not have the facility to use banks because they have been refused a bank account. I fail to see how we can abolish cheques while the banks are excluding people from the lower socio economic groups based on earnings or being in receipt of benefits

janette Brasier says:
11 June 2011

If cheques are stopped I am sure to stop sending money to charities and will find it very difficult to send money to my grand children and god children which are numerous without them. Also I sometimes need to pay local bills by post and will not send cash in an envelope. What alternative will I have?

Lana says:
12 June 2011

I have read the comments above with great interest. Having been the victim of scammers recently and having had to arrange new plastic as a result, it has made me feel extremely vulnerable and insecure with cards. I am now committed to using cheques more often for safety and convenience and also to get a much clearer idea of how much I am spending. Since using a debit card almost exclusively for several years, my expenses have more than doubled. I am in favour of keeping cheques for the time being, not least because I want to support my favourite charities but to keep in place a safe form of payment for ALL members of society.

Andy says:
12 June 2011

I dont think Payments Council have said they will be scrapping cheques in 2018. They will stop the central Cheque Clearing process as they say volumes will have dropped significantly, whcih will be prompted by “alternatives” (what ever they may be). Can Which? please clarify what has actually been written in their proposals?

The arguments both for and against will trundle on, but if the volumes dont drop life will continue as is……

Babalu says:
12 June 2011

Both my husband and I get paid by cheque often. I have a shop and refuse to pay for a card machine as there are cash points not far away and cheques are still in use. I don’t sell high end goods so folk don’t usually need to use credit cards to pay. I would miss the use of cheques for myself also as I pay all my invoices with them. My husband is a Joiner and he gets paid by cheque often. I’m sure older generations wouldn’t like to use a text or online service as suggested above. Credit/debit cards have faults also but the banks wouldn’t scrap them as they make too much money from them. I imagine that what ever alternative the bank come up with for cheques will cost small buisness’ more to use also. I’m sure It’s all about how much money they can squeeze out of us at the end of the day.

Martin Jeeves says:
12 June 2011

As an amateur community-based drama group we would seriously miss cheques and indeed are not sure what the alternative could be. Using credit or debit cards or transferring funds, often to other local organisations , are not an option.
They assist in forming an auditable trail.
There is also the desirable feature that requires two officers to sign a cheque for any payment to be valid.

anne penhow says:
12 June 2011

The nearest ATM is 10 miles away, so cash is not an easy option for some transactions. I have a computer and am happy to send or receive many electronic cash transfers. However, there are situations where a cheque is more convenient for paying money eg
Paying money to a club or a tutor (for a course of lessons).
Paying workmen.
Paying money to a small shop, without card facilities(they are expensive to put in place for a small business)
Posting money to grandchildren or others who do NOT have a bank account. (To send postal orders there needs to be an accessible post office, out here that is a prob.)
The present system works. It should be possible to run the same system on a smaller scale. WHEN EVENTUALLY ALMOST NO CHEQUES ARE PROCESSED, WE WILL KNOW THAT THEY ARE NO LONGER REQUIRED.