Britain's banks have been given a two month deadline to voluntarily speed up payments clearing processes or face the prospect of enforced reform through legislation.
According to a report by The Times, government ministers have lost patience with the slow progress made in instituting reform and are calling for more commitment from an official task force, which was set up by the Office of Fair Trading (OFT) last year.
The task force, which comprises of payment clearing companies such as Apacs along with consumer and business groups, is due to report to the government in April. According to The Times, an inside source has said that a regulator and legislation will be introduced if the group fails to show progress.
Some members of the task force are also concerned by the lack of progress and have threatened to leave the group.
Lawrence Baxter, a senior policy adviser at Which? who sits on the task force, told The Times: "If we get to April without getting some kind of commitment from the banks, we will seriously consider leaving the task force. If we are not satisfied there's no point in continuing in a process that’s not delivering anything."
Baxter also claimed to have support from other task force members including the National Consumer Council, the British Retail Consortium, the Federation of Small Business and the British Chambers of Commerce.
Last year UK consumer groups condemned the banking industry for failing to speed up clearing cycles under the newly-revised Banking Code.
Payment clearing times in the UK are longer than in almost any other G10 country, with some banks taking up to five days to process payments. Last year an OFT report estimated that British consumers are losing up to £30 million annually in lost interest payments due to delays in clearing standing orders, Internet and telephone banking payments.
Under the revamped Code, which comes into force today, banks and building societies will be compelled to inform customers if payments take longer than the standard three-day cycle for cheque clearing.