MSE News: Treasury Committee to reopen cheques enquiry

Culex

NFH wrote: »

Before abolishing cheques, the banks will have to support the requirement for authorisation by more than one user for each outgoing payment on online banking. They already follow this principle at wholesale investment banking level in their own systems, known as "four eyes" where two employees have to authorise a payment.

I suspect that may be to stop employees "doing a Leeson". :rotfl:

Paulgonnabedebtfree

Culex wrote: »

Exactly!


Paulgonnabedebtfree also evidently pays his income tax and VAT in full. :rotfl:

Alas, the image of the window cleaner as a tax fiddking dole cheat persists .
Seriously though, I do pay my taxes in full. I acknowledge that I live in a society that usually provides for the most basic needs of people who are unable to look after themselves at some point in their lives. I was on the receiving end of that earlier in my life (two brief spells of unemployment and some very expensive medicines on another occasion). I accept that this has to be paid for.
As for the VAT. No VAT. It's not compulsory for a business to register until its turnover reaches, or looks likely to reach, something like £70k in a rolling 12 month period. As a sole trader, I don't even come close. So I exercise my option not to register for VAT. I really would have to go some to clean that many windows in 12 months .

spenderdave

I am also treasurer of our amateur radio club, a small one with around 25 members. This year I gave people the option of internet payment on the renewal form. Only 2 people took up this option, the rest were either cash or cheque. And this is for a group who is very technical and internet savvy. And of course being a club which requires dual signatories we don't have internet access so I have to wait to see the next month's paper statement to see who has paid this way.

Likely to be a much slower take up in the wider world.

lordash

I can't understand the attitude of some of the people on here. I write cheques very rarely myself but there are some situations where cheques are the best (or only) option.

Also using internet banking is extra hassle: I have to obtain the person's sort code and account number, log into internet banking (a procedure that takes far longer than it should), find where I put the person's sort code and account number, type them in the boxes, find the pin pad thing and my bank card and then authorise the transaction and then type in the amount and reference exactly. Then of course, the recipient will deny ever receiving the money so I will have to fax copies of bank statements to them and spend time and money phoning the bank to get it sorted out. Writing a cheque takes seconds and once it is handed over, they cannot deny ever receiving the cheque. Also, with a cheque you get proof of encashment (ie. the recipient has had to physically take the money to the bank).

Perhaps instead of abolishing cheques they should modernise the system to the standard that they have in other countries, with near-instant clearing times and no physical paper exchange. That would make a lot more sense, but of course would take a few hundred thousand off the chief director's annual bonus so it will never happen.

Well, I certainly will now be using cheques wherever and whenever I can and I encourage others to do the same.

rb10

lordash wrote: »

I can't understand the attitude of some of the people on here. I write cheques very rarely myself but there are some situations where cheques are the best (or only) option.

Can you give an example of where cheques are the only option for making a payment?

lordash wrote: »

Also using internet banking is extra hassle: I have to obtain the person's sort code and account number, log into internet banking (a procedure that takes far longer than it should), find where I put the person's sort code and account number, type them in the boxes, find the pin pad thing and my bank card and then authorise the transaction and then type in the amount and reference exactly.

Writing a cheque is surely a greater hassle:
Find cheque book, write cheque, post cheque to recipient or remember to take it with you the next time you see them, remember to keep that amount of money 'spare' in your current account until they pay it in, and then the recipient has to take it to their bank, and wait four working days, and then they have access to the money.

BACS payments are just log in, type in account details, and payment amount, click 'Submit'. The money's then (generally) in their account straight away. Easy.

lordash wrote: »

Then of course, the recipient will deny ever receiving the money so I will have to fax copies of bank statements to them and spend time and money phoning the bank to get it sorted out.

No sure that this is an 'of course'. I have never personally experienced this - every BACS payment that I have sent has always been received.

lordash wrote: »

Writing a cheque takes seconds and once it is handed over, they cannot deny ever receiving the cheque.

Yes they can! The scenario is the same as denying that you've received a BACS payment: if you post me a cheque, I just say 'no, it must have got lost in the post'.

lordash wrote: »

Also, with a cheque you get proof of encashment (ie. the recipient has had to physically take the money to the bank).

With a BACS transfer you can get proof of receipt if you request it (it's known as a 'trace' on the payment and will provide you with confirmation as to what account the money ended up in.

glider3560

lordash wrote: »

Perhaps instead of abolishing cheques they should modernise the system to the standard that they have in other countries, with near-instant clearing times and no physical paper exchange.

Sounds like a Faster Payments payment!

lordash

rb10 wrote: »

Can you give an example of where cheques are the only option for making a payment?

Well perhaps 'only' was the wrong phrase to use, 'only practical' would be better. Normally for unusual/one-off payments to individuals or organisations where you do not have an account number. One example of this would be data protection act requests (or indeed any legal request where you have to pay someone a fixed fee). Most organisations would not have an automated system for this, and by sending them the cheque it is clear what the money is for and who it came from.

Another example are gifts to children. Sending cash in the post is risky and gift vouchers/cards expire and can only be used in the shops printed on the voucher (and have the same problems as cash if they go missing). Of course, a direct bank transfer would work, but it would take the element of surprise out of the gift (and of course the relatives would need to be informed of the children's account details in advance).

I am sure there are other situations, the point being these days they are infrequent but do exist.

rb10 wrote: »

Writing a cheque is surely a greater hassle:
Find cheque book, write cheque, post cheque to recipient or remember to take it with you the next time you see them, remember to keep that amount of money 'spare' in your current account until they pay it in, and then the recipient has to take it to their bank, and wait four working days, and then they have access to the money.

BACS payments are just log in, type in account details, and payment amount, click 'Submit'. The money's then (generally) in their account straight away. Easy.

I am not debating that cheques should replace online bank transfers, both are useful for different situations. Online banking for me is only useful if you know the recipient's account details in advance, otherwise it will be a lot of paper hunting and phone calls to get the right sort code, account number and payee reference.

This is also exactly why the cheque system needs modernising. There is no excuse for cheques not clearing instantly in this day and age.

rb10 wrote: »

No sure that this is an 'of course'. I have never personally experienced this - every BACS payment that I have sent has always been received.

This is a problem I had with an old letting agency. Quite often I would get phone calls asking why my rent was late a couple of weeks after sending the money electronically. I soon discovered I would save a lot of hassle by dropping a cheque off at the letting agent every month and collecting a receipt. Of course, this is purely to do with the incompetencies of my letting agent, but you will invariably meet these people in life and it can be a hassle sorting these things out.

rb10 wrote: »

Yes they can! The scenario is the same as denying that you've received a BACS payment: if you post me a cheque, I just say 'no, it must have got lost in the post'.

With a BACS transfer you can get proof of receipt if you request it (it's known as a 'trace' on the payment and will provide you with confirmation as to what account the money ended up in.

But the difference in this situation is that the payee has not attempted to take the money. As soon as they take the cheque to the bank, their story falls apart. It is very different if you have already paid them the money and they are still claiming that you owe them, and these sort of problems can be a pain to sort out. Anyway, with important payments you should always send the cheque by recorded post so that the recipient cannot deny not receiving the cheque.

I wasn't aware of the BACS transfer proof, that's very useful information to know. The point I was trying to make with the cheque however is that if it is deposited and clears, you know that the recipient has accepted the terms of payment -- for example, sending a cheque with an accompanying letter stating that the cheque is for full and final settlement. If they deposit the cheque they have in effect agreed to the terms and conditions. (I believe there was a case a long time ago where somebody wrote on the back of his monthly loan repayment cheque 'IN FULL AND FINAL SETTLEMENT', and successfully argued in court that due to this he no longer owed the bank any money)

KxMx

I'm with HSBC and any cheque I pay in gets credited to my account in full the next day.

Cheque's may not be common but they do still have valid uses and no alternative has yet been proposed so we can measure it up.

lordash

glider3560 wrote: »

Sounds like a Faster Payments payment!

Exactly, I believe how the system works is that the cheque is scanned in by the cashier and then discarded, and the amount and payee is then keyed in by the cashier (the other details gathered from the MICR characters on the cheque itself). The payment could then be processed via faster payments if the appropriate fraud preventions were implemented (such as inter bank instant account detail verification and signature scans).

NFH

lordash wrote: »

Then of course, the recipient will deny ever receiving the money so I will have to fax copies of bank statements to them and spend time and money phoning the bank to get it sorted out.

Your example is better used on cheques than non-cheques. If you send a cheque in the post, the recipient could deny having ever received it, and nothing on your bank statement would prove who received your money, unlike a normal bank transfer which results in the recipient's name appearing on your statement.