UK MPs grill Payments Council on abolition of cheques

UK MPs grill Payments Council on abolition of cheques

Plans to abolish cheques in the UK by 2018 have been slammed by a group of MPs hearing evidence from charities on the effect the move could have on older people.

In December members of the Payments Council voted to stop clearing cheques by 31 October 2018, vowing to find alternative methods.

Facing the Treasury select committee yesterday, Payments Council CEO Paul Smee was confronted by chairman John McFall, who questioned whether the "terminal decline" of cheques is actually a "fudged, managed decline".

McFall also questioned claims made by the council that the end of cheques would save businesses £750 million and banks £200 million, telling Smee to return to the committee with an independently verified cost analysis.

The MPs also heard from Jane Vass, of Age Concern and Help the Aged, who says the move could lead the elderly to hoard cash in their homes or hand other PINs and cards to other people, posing a security risk.

Vass says older people are the highest users of cheques and claims 21% of people think moving from the method will be a "major problem".

She told the committee that her charity accepts the need to manage the decline of cheques but wants viable alternatives introduced before a target date is set.

Her concerns were echoed by Teresa Perchard, policy director, Citizens Advice Bureau, who told the committee that 340,000 people still receive benefits by cheques through the post and that a number of cheques will still be in circulation in 2018.

The decline of cheque use in the UK has been widely documented. In 2000 cheques represented a quarter of all non-cash transactions but by 2008 they accounted for only one in eleven. Compared with a peak of 10.9 million cheques issued per day in 1990, by 2008 there were just 3.8 million a day.

Supermarkets Sainsbury's, Morrisons, Asda and Tesco along with retailers Boots and Marks and Spencer, are either phasing out or have already stopped taking them.

Comments: (1)

A Finextra member
A Finextra member 18 March, 2010, 03:18Be the first to give this comment the thumbs up 0 likes

The banking industry in the UK were asking for trouble by inflating the costs associated with clearing cheques. Next move will be to start charging customers who issue them on the grounds of "if you can make up the numbers to support the argument, then rachet up the price". Another shot in the foot by the banks, I hope it hurts.