Payments Council carpeted over cheque guarantee card as politicians smell blood
16 November 2011 | 8297 views | 0
After forcing a humiliating climb-down on the abolition of cheques, UK politicians are now calling on the Payments Council to bring back the cheque guarantee scheme alongside proposals to tighten regulation of the bank-run body and interbank payments in general.
In July, Britain's banks scrapped their plans to abolish cheques by 2018 after pressure from MPs, consumer groups and charities. At the time, the Council insisted that the cheque guarantee card scheme that was killed off the previous month would not be revived.
Under pressure from the Treasury Committee, the Council relented and promised to look again at that decision and present its findings at year-end.
But in a report into the fiasco published this morning, the Treasury Committee is pushing the Payments Council to provide further details of the research it is undertaking as well as the decision-making process that will follow once the research is complete.
"There is a case for reintroducing either the cheque guarantee card scheme or an alternative mechanism to ensure cheque acceptors have confidence when accepting cheques," states the Committee. "Without such a scheme there is a risk that more and more shops and other bodies will refuse to accept cheques; the cheque would wither on the vine."
The Committee is urging the government to intervene to force the banks' hands, and calling for tighter regulation of the payments system.
"Bringing the Payments Council within the scope of financial regulation is needed to ensure there is never again a repetition of the cheques debacle," states the Committee. "The Payments Council was able to take decisions affecting millions of people at its own initiative without any effective scrutiny by a regulatory body."
The strong words have found a sympathetic ear with the financial secretary to the Treasury, Mark Hoban, who says the government broadly endorses the Committee's recommendations.
In a written response, Hoban says the government may need to go beyond the Committee's recommendations if it is to bring the Payments Council to heel.
"This is because extending regulation here would need to include the relationship between the Payments Council, its members and inter-bank payment systems," writes Hoban. "I therefore propose to consult on the options, including options for creating a new regulatory structure for the Payments Council and the inter-bank payments regime."
The consultation will take place early in 2012, he says.
In a measured response to the move, Adrian Kamellard, chief executive of the Payments Council says: "For us it's a timely point to shine a light on payments regulation as only last week we also launched a consultation to review our governance arrangements. This important review, agreed with the Office of Fair Trading, will look at how we consult and engage with different stakeholders and whether we are delivering strategic direction for the payments industry."