New Cheque Clearance Rules

gt94sss2

Beate wrote: »

Thanks, so in a nutshell the 2-4-6 rule means cheques
earn interest after 2 days
money can be withdrawn after 4 days
and clear after 6 days?

Even though, it says 6 days, you really need to wait 7 to make sure the cheque hasn't bounced.

HSBC say:

If a cheque paid into your account is returned to us unpaid, we will not debit your account beyond the sixth working day after it was accepted by us. Because we process overnight, the debit to your account could appear up to 9am on the seventh working day. For example, if you pay a cheque into your account on Monday, you will not be debited after 9.00am on Wednesday the following week.

and they won't be alone in using batch/overnight processing for cheques.

On the subject of when the 6(7!) day period doesn't apply they say:

A cheque you pay in may be returned more than 6 working days after you have paid it into your account

(i) where you are, or we reasonably suspect you are, knowingly involved in a fraud concerning the cheque, or
(ii) if you have given your express consent.

Also, the 6 day period does not apply to cheques paid in at or drawn on branches in the Channel Islands and the Isle of Man.

Regards
Sunil

llandaff

This is simply the latest ploy by the banks with the collusion of APACS to keep one step, or maybe two or three, ahead of their customers. The simple clearing of cheques for funds (i.e. you have the money or overdraft to cover it when presented) can be done immediately by the computers; the banks have largely given up on examining all cheques (for errors, signatures, dates and even amounts - the computers always work on the keyed-in magnetic stripe figures when paid in over the counters - which can be wrong) expecting the cashiers wherever the cheque is paid in to notice everything except the genuineness of the signature, because it costs too much in labour hours and time of execution. Therefore it is quite easy for cheques of small amounts to pass through with a false signature or even no signature at all. It happens. Examination of cheques occurs only when the amounts are above a certain level or a particular account is under scrutiny. This was decided long ago, on the basis of costs of examining against risk of amounts lost. It was also the first step in taking the transportation costs out of the equation. Ever since that decision was taken the claim of needing 3 to 4 days for clearance of funds has been a white lie.
It used to be the case that a cheque had to be considered as cleared after 12pm on the 4th day, there being a small time allowance for the morning of the 4th day to cover 'inadvertence' - where a cheque had slipped through by mistake - but this was stretched by many managers to allow extra time for good (and the not so good) customers to pay in to cover. The inadvertence rule was scrapped some years ago. Sometimes a cheque would be sent for 'special clearance'; that meant sending it by post direct to the drawee bank and telephoning the next day for an answer. This only ever saved one day as the drawee bank might not have received it, or not even 'wanted' to receive it on that first day. Nowadays, if you know how reliable most of the post is, it would be even slower to use a 'special presentation'.

So what is all this fuss about? Simple. The banks want to give customers the impression that they are offering an improved system; well there is a bit of an improvement, essentially that all this is set out in print and applies to all the named banks. But the bottom line is that they have given nothing away; nothing that will be of any real benefit to customers; and they will still have millions of customers money to place on the overnight market earning very useful profits. There must come a time when they will be forced to give that up, but do not watch this space. Even then they will already have dreamed up other schemes to charge us for other things thereby creating yet another profit centre(s). Hey ho.;)

llandaff

Trish_Carrington wrote: »

This is a continuation of a decades-long scam. In Australia and New Zealand over 30 years ago, their inter-bank systems allow for a cheque paid in this morning to be cleared and drawn from within hours - guess why? it's done by computers - they must all link to a central clearing system. You can't tell me that 30 years on, and with our supposed high-tech IT systems ours don't do just the same thing, but like to garner the millions of pounds' interest they can earn by pretending it takes all these days to cart cheques round the country in motor vehicles. Take us all for idiots...

Yes, but then you do not know the history over here. There was no cooperation between the banks. The BoE did not even suggest that they should. Each bank went about computerisation in a different way, and despite earlier trials (one bank had even had computerisation going back to the war on trial with enormous valve computers covering a set few branches in the City) they all fumbled about seeking the 'best deal'. That meant they ended up with incompatible systems and the hardware was cheap and nasty, continually failing, costing goodness knows how much to keep teams of engineers on the ready to speed to the next fault.

The history of all this is quite funny, if you can take it out of context. Blind leading the blind. One bank even signed up for a system that had not even been built for any sort of trial, and then started to worry as the time passed by and nothing was forthcoming. There was a hint that this was an OZ company or a branch in OZ of a bigger company. In the end that bank had to plead with a well known company to help them out - it did, but not as the bank expected and that is another long story.

The catalyst for the sudden urge to compute was brought about because decimalisation was on the horizon. This was fixed. If any bank had not got computerised by then they would have had such an enormous task in man hours, calculations by hand, room for lots of errors, unable to satisfy customers with statements, handling two systems at the same time etc., well you can imagine the problems. It was entirely feasible that a bank might even have to throw in the towel and be taken over to settle the disturbance and that would have been yet another massive task.

Thankfully, they were all able to operate on decimal day without too many teething problems but it was a close call. Since then it has taken years for them all to see the sense of cooperation with compatible systems. There are, of course, many more facts involved but that is essentially why the OZ system has been so far ahead. Perhaps that was all part of a cunning OZ plan when offering a system not even built...........?

llandaff

James wrote: »

I wonder why UK Banks don't adopt the U.S. system being used by an ever increasing number of US Banks. If you were presented with an Cheque from a US Bank, and although you weren't a member of that bank. You can withdraw cash against that cheque there and then.

Details Click here: (Excuse spelling of cheque (check), but it is a US site).

You too can use the same concpet too in th UK to protect yourself from ID Theft.

www.freeidprotection.co.uk

Well there is a very good reason for the US position. Not a lot of people over here know that the rules in the US are quite different to ours. Essentially, if any US customer draws a cheque which cannot be paid upon presentation due to lack of funds to cover said cheque, that is a criminal action. NB criminal. If that was the case over here our prisons would have been overflowing years ago with all the miscreants who knowingly issued cheques without available funds let alone those customers who made a miscalculation or forgot.
I believe that the suggestion was made many years ago that it might be a good idea to bring in here until it was pointed out that the Home Office simply would not be able to cope with the flood of prosecutions, this would bring the criminal justice system to a halt, MPs would be losing seats for supporting any bill that included it, and the general rumpus from the public and press was not a matter that any British government could contemplate.
There's usually a reason, but you may have to dig to find it.;)

Mikeyorks

llandaff wrote: »

The simple clearing of cheques for funds (i.e. you have the money or overdraft to cover it when presented) can be done immediately by the computers;

A lot of what you say regarding Banks not checking cheques - is totally accurate. But not quite sure what conclusion you're drawing from that .. as it hasn't happened for years.

But .. quote above ... you're quite wrong. And are making the assumption, as so many others, that all cheques go into Banks.

They don't. The majority of cheques that transit Clearing each day are paid direct to Credit Card companies / HMRC / Post Office / TV Licensing etc etc. And their systems are geared to processing the cheques + accompanying payslips to generate data for their own accounting systems / databases. So how do you consider those cheques can 'immediately be cleared by the computers'? As, at the end of the first day, they're still on paper and dotted all over the UK. Whilst the UK Clearing system, which processes the paper into electronic data is in Milton Keynes.

llandaff

On a general note I believe you will find that scammers, fraudsters et al do not bother with cheques nowadays simply because there are so many more lucrative ways of getting hold of ours or the banks' cash. The number of cheques issued is gradually declining and in the main businesses are, or soon will be, the major users. Large corporations almost certainly all of them use electronic payments nowadays, and this extends to many medium sized businesses. So it is the small business category that still has the need for cheques and they, of course, form the largest number of businesses. When the banks make it easier and more cost effective the small businesses will follow suit. At that stage expect a drive by all the banks to stop providing cheques, or make an exorbitant charge first, and get everyone to use those oh-so-useful plastic cards. If I ever get one wallet that will hold all my present cards, let alone the future ones that I'm told I 'must' have, I'll never be able to carry it. Roll on the day when just the one piece of plastic will do it all. Science fiction? No, the technology is here, it's just that they will never cooperate. Doh.:rolleyes:

Mary_Hartnell

llandaff wrote: »

Well there is a very good reason for the US position. Not a lot of people over here know that the rules in the US are quite different to ours. Essentially, if any US customer draws a cheque which cannot be paid upon presentation due to lack of funds to cover said cheque, that is a criminal action.

Same in France - not funny if you have your cheque book stolen.

llandaff

Mikeyorks wrote: »

A lot of what you say regarding Banks not checking cheques - is totally accurate. But not quite sure what conclusion you're drawing from that .. as it hasn't happened for years.
Because it costs too much as I said and yes that has been the case for many years, so my point is that it is not a reason for any delay and the actual check does not have to be transported as I also said. Maybe in my haste I did not get everything in logical order.

But .. quote above ... you're quite wrong. And are making the assumption, as so many others, that all cheques go into Banks.
No, I did not make any assumption. I was referring to the cheques presented by customers for paying into their accounts. This thread, surely, is all about the banks and their customers, not about government departments and the like. Wherever government departments are concerned all the normal rules and practices go out of the window as you will know if you ever deal with them, especially the DWP. However, wherever the cheques are stored they are still the responsibility of the banks on which they are drawn, and the rules for payment still apply.

They don't. The majority of cheques that transit Clearing each day are paid direct to Credit Card companies / HMRC / Post Office / TV Licensing etc etc. And their systems are geared to processing the cheques + accompanying payslips to generate data for their own accounting systems / databases. So how do you consider those cheques can 'immediately be cleared by the computers'? As, at the end of the first day, they're still on paper and dotted all over the UK. Whilst the UK Clearing system, which processes the paper into electronic data is in Milton Keynes.

They can be immediately cleared by the BANKS computers when they get into the banking system. You are trying to cloud the issue without considering what happens after the credit card companies get those cheques. Work it out.

Mikeyorks

llandaff wrote: »

Yes, but then you do not know the history over here.

Not quite sure you're doing too well either.

llandaff wrote: »

The catalyst for the sudden urge to compute was brought about because decimalisation was on the horizon.

The catalyst .... was simply the urge to computerise, because the benefits were suddenly obvious. Decimalisation was an issue, certainly not a catalyst - as most computer systems in the run - up to Feb 1971 were unbelievably basic, totally unstable and trained programmers were at a premium. Few Banks had anything other than embryonic systems, often using plug boards and with data on punched cards or paper tape

llandaff wrote: »

Thankfully, they were all able to operate on decimal day without too many teething problems

Anyone with a large accounting system did not 'operate' on 15th Feb 1971 .... they were all too busy manually converting records. Despite most had started the conversion process weeks in advance - the main thrust had to be over the weekend preceding Mon 15th - and for the moratorium that had been declared over the ensuing few days. But there was a counter service as, of course, notes / coins had been in dual circulation for months. None 'went to the wall' - so it was hailed as an unqualified success. But few of the conversions - right across UK business - were on 'computer systems'

llandaff wrote: »

Since then it has taken years for them all to see the sense of cooperation with compatible systems.

I'm afraid that's where you really let yourself down. Banks don't have compatible systems - they're all unique and the reason for so many posts saying 'who's got the best online system' etc etc. They're only 'compatible' at the interfaces where they receive / despatch files in prescribed formats from /to BACS / IBDE etc. So they write programs to receive/ send those interface files - and integrate / extract them to /from their own unique systems.

There was a large Govt inspired study on conversion to Euro a few years ago. Just one of the threads that looked at, was the lessons that could be learned from the 1971 decimalisation conversion. The net effect was ... that the date of 15th Feb was a real runner .... if the financial institutions were the determining factor in a conversion date. As it was, and remains, about the quietest date in the financial processing calendar. The other positive was that the operation of dual currency for a period before - and after - the cut over date ... was mandatory.

But the unequivocal evaluation on 'computer systems' was that the Euro conversion, which will overwhelmingly be driven by electronic data conversion ........ had nothing whatsoever to learn from decimalisation, where virtually no electronic data existed

Mikeyorks

llandaff wrote: »

No, I did not make any assumption. I was referring to the cheques presented by customers for paying into their accounts. This thread, surely, is all about the banks and their customers, not about government departments and the like

Wrong, on a fundamental, again I'm afraid.

The thread is about the new Cheque Clearance system introduced 30th Nov. It covers the clearance of all cheques - not just those paid over a Bank counter by an individual. So it equally covers cheques paid to businesses. You can't exempt them simply because it's makes your flawed argument easier.

Start date announced for important changes for customers paying in cheques

• From 30 November changes to the cheque clearing process come into effect
• Changes to provide certainty and increased transparency for business and personal customers when paying in cheques

- quote from post #1 ..... which clarifies why this thread exists.