Cheque clearance times - a reply from the bank

JohnPeard

I thought you may be interested in this reply from my bank:

"
Dear Mr Muggins

Thank you for your recent letter. We are sorry to hear that you are unhappy with the services we provide and I have been asked to respond to you in more detail.

Your queries are why cheque clearance times are so long, why it takes up to five days to transfer funds on-line, and where your funds are held in the meantime.

As you may know, the bank of LloydsWest of Scotland was one of the first to invest in computer technology to handle cheque clearances, and this means that our systems are slightly outdated, compared to those in other countries such as Portugal. In fact the systems we use are a version of the Babbage Analytical Engine, which is a mechanical computing system, developed in 1839, operating on a system of cogs and gears.

Due to the oil crisis in 1973, we have reduced the amount we spent on lubrication, so we do not need to pass on those increases to you, the customer. As a result, the machines do not run as quickly as they once did, which is why cheques now take longer to clear than they did in the 1920’s.

We have received over fifty thousand letters suggesting that we update our IT system to one employing two Pentium 2 PC’s, with Windows 95, interconnected by a modem running at 1200 bps.

However, we have not identified any customer demand for this, and the expenditure of nearly £600 would dramatically affect our yearly profit of £15bn.

The question relating to on-line transfer of money is slightly more complicated.

Transfer between banks works on a similar method to that used on the Starship Enterprise to beam Captain Kirk to the Planet Zog. Where is Captain Kirk on the way? Nowhere at all, of course. The only difference is that their transporter system is entirely fictitious, whereas beaming money takes up to five days in our system. There is no one at the bank qualified to give you a simple description of workings of this system, and we suggest you ask a theoretical physicist to explain the effects of wave-particle duality on the space-time continuum.

We have charged you £35 for this letter, which we note has now taken you into an unauthorized overdraft. We reluctantly have to levy a further fee of £30 as detailed in our terms and conditions.

As a valued customer we have arranged a temporary overdraft of £100. As this is subject to an arrangement fee of £75, this means you have already exceeded this agreed facility.


Please arrange to bring your account in order within the next five days. Please be assured we are keen to help you in this difficulty and our near English-speaking staff based in our call centre in Bangalore will be pleased to discuss this. Calls are charged at a premium rate.

Yours sincerely
"

To be honest, I have changed the wording ever-so-slightly to protect the anonymity of the bank.

JohnPeard

Sorry, I know it's considered bad form to reply to one's own posts - but one of the points raised in the above has surfaced, with some important implications.

I had complained to Lloyds when an on-line transfer took 5 days from debiting my business account at NatWest to my personal account at Lloyds. The delay resulted in returned DD charges of £65. (Now repaid, after my kicking up stink, it has to be said).

I have been pressing Lloyds and NatWest to provide an explanation of WHY such tranfers should up to 5 days - (I won't accept that 'it just does, that's all').

This is the reply from Lloyds, received Sat.

"..electronic transfers still take three days to reach another bank, those our our procedures and I must advise you there are no immediate plans to change them in the near future"

"...we are not obliged to explain in great depth the reasons behind procedural decisions made."

Hold on a mo, you charged me £65 for delays caused by your 'procedural decisions' and don't have to explain them !!! :mad:

So, folks, where should I take this ??

Answers on postcard to .....

crawley_girl

JohnPeard wrote:

I thought you may be interested in this reply from my bank:

"
Dear Mr Muggins

Thank you for your recent letter. We are sorry to hear that you are unhappy with the services we provide and I have been asked to respond to you in more detail.

Your queries are why cheque clearance times are so long, why it takes up to five days to transfer funds on-line, and where your funds are held in the meantime.

As you may know, the bank of LloydsWest of Scotland was one of the first to invest in computer technology to handle cheque clearances, and this means that our systems are slightly outdated, compared to those in other countries such as Portugal. In fact the systems we use are a version of the Babbage Analytical Engine, which is a mechanical computing system, developed in 1839, operating on a system of cogs and gears.

Due to the oil crisis in 1973, we have reduced the amount we spent on lubrication, so we do not need to pass on those increases to you, the customer. As a result, the machines do not run as quickly as they once did, which is why cheques now take longer to clear than they did in the 1920’s.

We have received over fifty thousand letters suggesting that we update our IT system to one employing two Pentium 2 PC’s, with Windows 95, interconnected by a modem running at 1200 bps.

However, we have not identified any customer demand for this, and the expenditure of nearly £600 would dramatically affect our yearly profit of £15bn.

The question relating to on-line transfer of money is slightly more complicated.

Transfer between banks works on a similar method to that used on the Starship Enterprise to beam Captain Kirk to the Planet Zog. Where is Captain Kirk on the way? Nowhere at all, of course. The only difference is that their transporter system is entirely fictitious, whereas beaming money takes up to five days in our system. There is no one at the bank qualified to give you a simple description of workings of this system, and we suggest you ask a theoretical physicist to explain the effects of wave-particle duality on the space-time continuum.

We have charged you £35 for this letter, which we note has now taken you into an unauthorized overdraft. We reluctantly have to levy a further fee of £30 as detailed in our terms and conditions.

As a valued customer we have arranged a temporary overdraft of £100. As this is subject to an arrangement fee of £75, this means you have already exceeded this agreed facility.


Please arrange to bring your account in order within the next five days. Please be assured we are keen to help you in this difficulty and our near English-speaking staff based in our call centre in Bangalore will be pleased to discuss this. Calls are charged at a premium rate.

Yours sincerely
"

To be honest, I have changed the wording ever-so-slightly to protect the anonymity of the bank.

Love it!!!! For a nano-second I thought this was the actual reply - ha ha ha!

JohnPeard

JohnPeard wrote:

This is the reply from Lloyds, received Sat.

"..electronic transfers still take three days to reach another bank, those our our procedures and I must advise you there are no immediate plans to change them in the near future"

"...we are not obliged to explain in great depth the reasons behind procedural decisions made."

Is there any way one can I force the bank to disclose their procedures?

crawley_girl

I'm not sure that you can force them to disclose however, perhaps it is worth checking the terms and conditions they gave you when opening the account.

When claiming back 'unfair charges' each of the banks/ credit card companies have claimed to be fair and transparent but have never actually gone into further detail about this and then refunded the monies.

I really don't know. Maybe someone else will be more knowledgeable!

:heartpuls CG :heartpuls

grumbler

JohnPeard wrote:

...I have been pressing Lloyds and NatWest to provide an explanation of WHY such tranfers should up to 5 days - (I won't accept that 'it just does, that's all')......

Have you abandoned yoru Criminal Proceedings for the sake of writing funny letters? I bet that your 5 days were in fact 5 calendar days. So why don't you ask: "Why 3 working days?"?. The answer is - because all banks use BACS. Yes, it is far from being perfect nowadays, improvements are needed and are expected soon. However, what's the point in pressing any particular bank that is just a member of this system?

Efficient :rolleyes: 3 Day Cycle



BACS payment cycle is the most efficient process to transfer funds:

Day 1 – Submit payment
Day 2 – Processed by BACS
Day 3 – Funds in Bank

This process is therefore :rolleyes: fast :rolleyes:, efficient :rolleyes: and effective :rolleyes: .

http://www.bacspayments.co.uk/FAQ.htm

P.S. Your posts above are very confusing. The title is about 'cheque clearance times', but further comments are about 'on-line transfer' ...

JohnPeard

Hello Grumbler

Interesting reply, but all I have written is related and relevant.

Sometimes the best way of getting a message across is by humour - which also keeps you sane. The 'letter' actually does reflect, pretty accurately, the real nature of responses I have had from banks. (Have a look at the APACs web-site in their FAQs about cheque clearance times - not really a lot of difference)

I will take issue with anyone on the clearing cycle (whether cheques or on-line) - it is NOT efficient, and there really is no excuse for on-line transfers to take more than one day - and that is only down to scheduling, not computer processing time.

These inefficiencies are designed in, in my view, primarily to screw money out of customers. If this is deliberate, then it is not only unlawful but criminal.

Also isn't it about time we dropped this 'working day' nonsense? It may have made some sense when bankers went to work in bowler hats, started work at 10.00 on Monday and finished at 3.30 on Fridays, but we are now in the 21st century !! If you are being charged 33% apr for an unauthorized overdraft, the interest charges still accrue, they are not suspended on Sat, Sun or Bank Holidays.

Am I in cloud cuckoo land? Perhaps so, but it really is about time the British for once stopped rolling over and demanded that the banks' service were operated openly, efficiently and honestly.

What about an efficient 3 minute clearing cycle?

Minute 1 - Submit payment
Minute 2 - processed by efficient, real-time IT System
Minute 3 - funds in bank.

Rafter

The fact is that BACS was designed with older IT systems in mind.

Older technology could not cope with thousands of transactions going backwards and forwards in real time.

Things were therefore 'batched' with stuff leaving bank one on day 1 being totted up to find out how much each bank owed the other and converting computer files to be compatible with different bank systems before clearing on day 3.

However......

The banks designed 'link' the cash machine network to cope with 'instant' withdrawls though and have been dragging their heels about upgrading bacs to be more instantaneous.

As I've posted elsewhere before though - I actually like the fact that there is some delay so some phisher who has somewho gained access to my account can't clear it out straight away and there is some chance of recovering my money - with instant transfers the money could be transferred and withdrawn from an ATM in minutes never to be seen again.

R.

JohnPeard

Yes, if this were the case, then I would agree.

However, the mechanism should be open (which it isn't)
It exists to make the bank money, not protect the customer.

Please bear in mind that the funds are held in the 'receiving' bank, not the 'paying' one. If it were all down to protecting fraud, the delays would be in the latter, not the former.

Mrs_pbradley936

They just want to hold on to your money for longer! Simple as that. During the time they are holding your money (well yours along with everyone else’s) their traders are playing with it and earning a fortune. Traders earn £3000 a day (some of them earn a lot more) on a bad day and the banks have roomfuls of them trading everything from currencies and interest rates to coffee and oil. and Of course the technology is there to process your transactions very quickly but it would cost them a fortune if they did it. If you want to pay extra to express the payment you can. Anyway I expect you know all that and you want a justification rather than an explanation.

JohnPeard

I want to know how they can 'fine' me £65 by bouncing a DD, when they are possession of my money ! .. and then have the b****y cheek to say they don't have to explain their 'procedures'.

If I took my car into a garage, for a service which 'takes up to three working days' and then I see it being driven up the motorway by one their car mechanics taking the family on a day out, I would be thumping on the service desk for an explanation.

To then charge me £65 for the privilege would probably result in attempted murder !!!

What's the difference?