LLOYDS how long to clear cheques?

JohnPeard

.., In the UK, that is.

This is FAQ posted on the APACs site :

http://www.apacs.org.uk/resources_publications/faqs/cheques_2.html

"Cheques
Why can't the system be speeded up?
Cheque clearing is paper-based and was not designed to be an electronic system. Volumes are declining and it makes more sense to target investment toward card and electronic payment systems where growth is consistent. For example, more than £1 billion is being invested in chip and PIN on all credit and debit cards."

Read this another way. Yes, we know we are inefficient, but we are not prepared to spend the money in order to make us efficient. Anyway, why should we, when we make so much money out of the delays?

(Still doesn't answer why on-line transfers (not cheques) still can take '3 to 4 working days to clear' [LLoyd's response] )

Frankly, there is no excuse, it's just a money making rip-off.

:mad:

gt94sss2

JohnPeard wrote:

(Still doesn't answer why on-line transfers (not cheques) still can take '3 to 4 working days to clear' [LLoyd's response] )

Because they use the same IT systems for on-line transfers as they do for cheques. It was not worth it to develop a new system for these and if anyone really needed a faster transfer they could use CHAPS (which is not designed for large numbers of transactions)

When (soon) they finish updating the 100's of different IT systems involved and payments are transferred the same/next day rather than the 3/4 days it takes now (largely due to consumer pressure), you will find people posting here saying the exact opposite of what you are. i.e. Why is it still not taking 3/4 days?

This is because a large number of people still write cheques etc to pay bills where the money is currently not in their account but they know it will be by the time the payment is 'cleared'. If they continue to do this in future, the bank will just hit them with a charge due to insufficient funds etc.

Regards
Sunil

JohnPeard

Come on Sunil !!

It is great that a site like this produces a great deal of interesting debate, but really, you seem to be an apologist for (UK) banks.

As an example, my son now lives and works in Canada. On-line transfers are INSTANTANEOUS !!!! OK, so they charge a fixed fee of about £1, but this is transparent and well understood.

The technology exists to do real-time banking, but in the UK we are expected to put up with these in-built delays, which exist (in my view) solely to generate billions for the banks.

In the UK the amount of fees charged for returned DDs and cheques in in one year by UK banks is more than the cost of the Apollo 11 mission to the moon.

Why I am so incensed? Because a welsh-sounding named bank took 5 days to credit an on-line transfer from business account to my personal account. They then charged me £65 in fees for returning a £60 DD., because the funds weren't in my account !!

Where were they ? Suspense account ? Pseudo Credit ? Cyberspace? It really is a load of male cow's testicles. It is deliberate, calculated and manipulative.

(Actually, I think it is criminal, but that is another thread....)

gt94sss2

JohnPeard wrote:

It is great that a site like this produces a great deal of interesting debate, but really, you seem to be an apologist for (UK) banks.

As an example, my son now lives and works in Canada. On-line transfers are INSTANTANEOUS !!!! OK, so they charge a fixed fee of about £1, but this is transparent and well understood.

No, not an apologist and I don't work for a bank either.

For a while I lived in America and its a lot like Canada in banking terms - when I lived there the charging may have been 'transparent and well understood' but there was a charge for almost everything from taking out money at ATM's to having a cheque book printed for you or not maintaining a minumum balance in your account.

These are things we generally get for free in the UK as we tend to have 'free banking' - this is just a different business model, not necessarily better or worse - just different.

The technology exists to do real-time banking, but in the UK we are expected to put up with these in-built delays, which exist (in my view) solely to generate billions for the banks.

In the UK the amount of fees charged for returned DDs and cheques in in one year by UK banks is more than the cost of the Apollo 11 mission to the moon.

Same day transfers between institutions are available in the UK now - for a price.. just ask your bank how much a CHAPS transfer is

Yes, the price is higher than your son pays but he probably also pays other charges which you do not here.

The banks could have developed a 'real time' banking system here in the UK (and it seems a few have for internal purposes) but unless/until every financial institution upgrades their systems they can't use this for transactions between different institutions - which due to consumer pressure is finally happening.

Now, why didn't this happen before - I suggest its because the banks had no incentive to invest this money - it won't gain them any revenue for instance + I think UK banks were some of the first to use complex IT systems so they now have lots of legacy systems which interlink with each other and they would all need to be changed. I suspect other countries which introduced IT systems later, would find it much easier to update their systems.

Why I am so incensed? Because a welsh-sounding named bank took 5 days to credit an on-line transfer from business account to my personal account. They then charged me £65 in fees for returning a £60 DD., because the funds weren't in my account !!

Consider changing bank? Especally, if the two accounts are with the same institution, I agree that it should not take that long. If they are different institutions did you initate the online transfer during their 'working day' (as its a batch process) or was another day added due to that?

Other banks(i.e. HSBC) are able to and do move money instantly between their own customers accounts instantly if done online (for HSBC, this includes First Direct which is part of the same group)

Others (such again HSBC as an example) seem to have more 'reasonable' policies such as not charging you more than you gone overdrawn.

Regards
Sunil

JohnPeard

gt94sss2 wrote:

The banks could have developed a 'real time' banking system here in the UK (and it seems a few have for internal purposes) but unless/until every financial institution upgrades their systems they can't use this for transactions between different institutions - which due to consumer pressure is finally happening.

Now, why didn't this happen before - I suggest its because the banks had no incentive to invest this money - it won't gain them any revenue for instance + I think UK banks were some of the first to use complex IT systems so they now have lots of legacy systems which interlink with each other and they would all need to be changed. I suspect other countries which introduced IT systems later, would find it much easier to update their systems.

Thanks Sunil.

I do appreciate the time and effort spent in responding and debating this. However, what you said above, is probably at the heart of the issue.

The only 'incentive' banks have is to make money, so I agree, there appears to be little incentive to update.

For my part, I pay my (personal account) bank a fixed monthly fee (£10) for my current account and my business account a per-item fee. I am perfectly happy with this. I do, however, expect them to operate efficiently. There really is no excuse for UK banking IT systems to be out-dated - the UK is at the hub of the global financial market.

Yes I could change banks - but why should I have to? (Beside, the big four operate pretty much as the controlling cartel).

My real gripe, as you will have gathered, is that because the banks make so much out of the unlawful fees charged by being inefficient, there is a huge dis-incentive in getting them to change.

What would really cause the change? I fear only an action brought by an individual in the High Court, so that a legal precedent is set.

gt94sss2

JohnPeard wrote:

For my part, I pay my (personal account) bank a fixed monthly fee (£10) for my current account and my business account a per-item fee. I am perfectly happy with this. I do, however, expect them to operate efficiently. There really is no excuse for UK banking IT systems to be out-dated - the UK is at the hub of the global financial market.

Yes I could change banks - but why should I have to? (Beside, the big four operate pretty much as the controlling cartel).

See, I would never pay to have a current account in the UK - unless there was no choice.

I know Natwest and Lloyds among others are keen on pushing packaged accounts on customers but in my view most people won't benefit from these - hence they are a waste of money.

Changing banks is the ultimate way which you have in letting a bank know that you are unhappy with them. In particular, if you have a personal and business account at different banks and often transfer money between them, it may make sense to have them both with the same institution.

My real gripe, as you will have gathered, is that because the banks make so much out of the unlawful fees charged by being inefficient, there is a huge dis-incentive in getting them to change.

What would really cause the change? I fear only an action brought by an individual in the High Court, so that a legal precedent is set.

As I think you have been told elsewhere, the banks, building societies etc. are upgrading their systems now to allow for faster BACS payments.

Cheque usage seems to be falling off a cliff though, so I can't see any mone being invested to make those quicker.

Regards
Sunil

JohnPeard

gt94sss2 wrote:

As I think you have been told elsewhere, the banks, building societies etc. are upgrading their systems now to allow for faster BACS payments.

Cheque usage seems to be falling off a cliff though, so I can't see any mone being invested to make those quicker.

Regards
Sunil

Hello Sunil

Lloyds wrote to me on Sat, re just this:
"
...transfers still take three days to reach another bank, those are our procedures and I must advise you that there are no immediate plans to change them in the near future".

If I believed this was all down to out-of-date technology that was in the process of being updated, I could (perhaps) live with this. It isn't - the delays in the so-called clearing cycle are 'procedures' operated solely for the profit and convenience of banks, not their customers.

YorkshireBoy

JohnPeard wrote:

If I believed this was all down to out-of-date technology that was in the process of being updated, I could (perhaps) live with this. It isn't - the delays in the so-called clearing cycle are 'procedures' operated solely for the profit and convenience of banks, not their customers.

John, I think you've been informed (in reply to your other posts on this theme) that things are about to change...in that late next year we should see the introduction of same day/next day transfers in the banking industry.

There's a wealth of information on the OFT's website about these impending changes but, in the meantime, here's some 'light reading' about the likely impact of such improvements...

An economic analysis of the potential benefits and dis-benefits of faster payments clearing

This document, although running to some 73 pages, makes very interesting reading. Of particular note is the projected loss of a significant amount of float income* for the various users of the system...

The Office of Fair Trading (2003) estimate that float income in the UK amounted to around £20 million to £25 million per annum on standing orders and £10 million on internet and telephone banking payments paid through the BACS payment system.

So, with the surge in internet/telephone banking in recent years, what's the figure likely to be in 2007?...£80-100m? Add on the cost of the new systems (hardware/software/risk assessment/etc), and something will have to 'give'...won't it?

* Float income is derived from making use of the money whilst 'in-transit'.

System

You know what annoys me? Very often i pay cheques into my LLoyds account via the post office. The process is quite a slow proccess, in fact it takes 24 hours for my cheque to appear in my account - then theres the time it takes to clear. I wouldnt normally complain but when i draw money out of my account via the post office, the money is taken out of my account straight away.

Mikeyorks

JohnPeard wrote:

It isn't - the delays in the so-called clearing cycle are 'procedures' operated solely for the profit and convenience of banks, not their customers.

Fact ........ or further uninformed opinion?