Following cheques tussle, MPs bid to rein in Payments Council

Following cheques tussle, MPs bid to rein in Payments Council

In the wake of a battle over the future of cheques, the UK's Treasury select committee has published a report recommending a range of measures designed to strip the industry-dominated Payments Council of much of its power.

In late 2009 members of the Payments Council voted to set a provisional target of 2018 for the abolition of cheques but in April the Treasury select committee reopened its probe into the plans, claiming it had been "inundated with letters".

This prompted a July u-turn from Britain's banks, which scrapped the plans promising that "cheques will continue for as long as customers need them".

Despite welcoming the "belated" decision, the select committee says the Payments Council should "no longer have the unfettered power to decide the future of cheques, or other payment methods that directly affect millions of people".

In its report the committee recommends that the Treasury should use an upcoming Financial Services bill to bring the Council formally within the system of regulation.

The report also calls on the Council to "examine the reintroduction" of the cheque guarantee card scheme which was finally killed off in June and the banks insist will not be revived. Several groups, including Age UK, have argued that the scheme's demise has undermined confidence in cheques which could see demand "wither away".

Meanwhile, to strengthen the voice of consumers, the Payments Council board should be revamped to let any two of the four independent members, rather than all of them as at present, have the right of veto over decisions.

In addition, banks must be made to commit to giving the Council advance sight of any material related to the future availability of cheques that are sent to customers. They should also write to their customers stating that cheques will continue to be in use for the foreseeable future.

Andrew Tyrie MP, chairman, Treasury select committee, says: "Cheques have been saved, for the moment, but we need to remain vigilant. The incentives for the industry to get rid of cheques has not gone away. Neither have we. That is why we are making far-reaching recommendations about the future of the Payments Council as well as to secure the future of cheques."

The Council has indicated a willingness to accede to demands on customer communications and on independent directors but is opposing any move towards greater regulation, claiming it is not required.

You can read the select committee report here:

Download the document now 605.5 kb (PDF File)

Comments: (5)

David Birch
David Birch - Tomorrow's Transactions - London 24 August, 2011, 02:53Be the first to give this comment the thumbs up 0 likes

Come on Andrew! Cheques are far too modern for the new Britain being reforged by the coalition. Get the Payments Council to turn the clock back another century or so.

P.S. I hope you'll support my e-petition to reintroduce tally sticks. They were good enough for my great-great-grandfather and they should be good enough for you too.

A Finextra member
A Finextra member 24 August, 2011, 09:39Be the first to give this comment the thumbs up 0 likes

My only surprise is that it's taken so long for the political establishment to try and get greater control over payments mechanisms.

There is probably some justification for this, as payments are obviously a key element of the workings of the economy, but my worry is that, like so many other things in this country and in Europe, our politicians will simply screw things up monumentally.

And I do think 2018 was far too soon to be getting rid of cheques, any way...

Christopher Williams
Christopher Williams - RTpay - Winchester Uk 24 August, 2011, 09:52Be the first to give this comment the thumbs up 0 likes

I totally agree with the comment regarding how protecting cheques is retrogressive. There are many reasons for making every effort to convert all transactions to electronic form as soon as possible, not least in respect of reducing fraud, money laundering and tax evasion.

If we do not have real time fraud analysis of transactions, we encourage continuance of the problem. The aim should be to encourage all people to move to any form of electronic payment, whether it be by card, phone, social media or bank-based, not to elongate old-fashioned methods.

Finally, the austerity measures could be far less severe for groups such as the elderly if there were better elimination of fraud by the criminal groups who have a free hand while non-electronic transactions are available.     

Matt White
Matt White - Finextra - Toronto 24 August, 2011, 10:061 like 1 like

D Birch says: “P.S. I hope you'll support my e-petition to reintroduce tally sticks."

Didn't you set one up calling for the abolition of cash and cheques? Many signatures?

Jacqui Taylor
Jacqui Taylor - FlyingBinary - London 24 August, 2011, 17:10Be the first to give this comment the thumbs up 0 likes

Presumably a convenient means of MPs battling on another front with the banks, or possibly another innovate message to the industry. Either way it is likely to take up more time and money as MPs get involved in the Payments Council, with no gain to the customer.

Loved Dave B's history lesson in payments though.