Cheque clearance

innovate

Anyone know whether the cheque clearance process involves a visual check whether the signature on the cheque is indeed the signature of the account holder(s)?

And who is liable when a cheque with a forged signature is cleared?

(asking because an elderly, disabled, lady living in a care home, has just been conned out of almost £3,000 with two forged cheques that someone must have stolen from her room. We have reported this to the police but still want to do our own investigation).

Bossyboots

innovate wrote:

Anyone know whether the cheque clearance process involves a visual check whether the signature on the cheque is indeed the signature of the account holder(s)?

And who is liable when a cheque with a forged signature is cleared?

(asking because an elderly, disabled, lady living in a care home, has just been conned out of almost £3,000 with two forged cheques that someone must have stolen from her room. We have reported this to the police but still want to do our own investigation).

Not sure that it does.

We recently discovered one of our company cheques was stolen and used. The first we knew about it was when doing the bank reconciliation. This cheque had a forged signature but had been paid into an account and debited from ours. No-one had picked it up prior to that, even though the signature is clearly not that of one of the authorised signatories.

The mystery here is that the cheque stub is missing from the book but our accounts department is trusted implicity so it is unclear how the cheque fell into outside hands.

shopbot

I don't think it does. From what I know the whole cheque system is completely outdated and is definitely not a modern method of payment. I don't believe that the banks clearing houses make a comparison between the two signatures. It would be too time consuming if they did that with every cheque. For example as a retailer I know how much genuine people’s signatures can vary. It would rely on a judgment call on every cheque to decide whether the signature was within acceptable limits of similarity. This would be simply too consuming. To be honest in my line of work cheques are more of a nuisance then anything else I would rather deal with a credit or debit card any day!

Just out of interest how and where were the cheques used?

newfoundglory

They do, but not on most cheques. As far as i'm aware, banks only check the signature when it reaches/excedes a certain amount (eg. £10,000)

jonesMUFCforever

I think its lower than £10k although I have no absolute proof. I always thought that cheques over £1000 would be looked at for technical things like date of issue and words and figures but whether every cheque 's signature is looked at is doubtful until amount is much larger.
In the old days every branch would get all customer's cheques back to list and check but nowadays this is done centrally.
Eric

Bossyboots

Our company cheque was over 4k and that got through and it really is clear that the signature was wrong because although the hand writing is a good copy, they have misread the name of the signatory from whereever they saw it.

AndyR_3

The bank on which the cheque is drawn are liable for refunding their customer, and they will then try to recover funds from the collecting bank. They will probably want the matter to be reported to the police and both banks should co-operate with the police inquiry.

DO NOT let the bank fob you off.

MarkyMarkD

Agreed with the above.

Only some signatures are checked but it's the paying bank's responsibility to check them in all cases. So if they don't check, and the signature is wrong, they will have to pay up.

They don't check them all because the cost/benefit analysis is that it's cheaper to pay out on the 1 in 100,000 or whatever which are dodgy than to check the other 99,999.

Walletwatch

MarkyMarkD wrote:

Agreed with the above.

Only some signatures are checked but it's the paying bank's responsibility to check them in all cases. So if they don't check, and the signature is wrong, they will have to pay up.

They don't check them all because the cost/benefit analysis is that it's cheaper to pay out on the 1 in 100,000 or whatever which are dodgy than to check the other 99,999.

Exactly. Used to manage the branch operations of an international bank in India, one of the departments being the Clearing department, and we used to check signatures only for amounts greater than INR 10000 (GBP 125) We however used to check the cheque leaves to confirm that each of them below the threshold amount had a signature (whether valid or not), as we did not want to pay out on an unsigned chq.

All the more reason to keep your chq books safe and check your periodic account statements very carefully for stray unexplained debits.

JanCee

I used to work for RBS and only cheques for £5000 and over were checked for signatures and technical irregularities. However, it is the bank's liability and not the customers if a fraudulent cheque is subsequently paid. It is well worth knowing this when approaching the bank for an investigation, it is not the customer's problem that each individual cheque is not examined, this actually saves the bank a fortune.

jonesMUFCforever

JanCee wrote:

I used to work for RBS and only cheques for £5000 and over were checked for signatures and technical irregularities. However, it is the bank's liability and not the customers if a fraudulent cheque is subsequently paid. It is well worth knowing this when approaching the bank for an investigation, it is not the customer's problem that each individual cheque is not examined, this actually saves the bank a fortune.

Whilst I agree fully with the above in fraud cases, a customer is not automatically entitled to a refund if they issue an unsigned cheque in error but subsequently try to claim off the bank.
eg Someone issues a cheque ifo Inland revenue,it is unsigned and bank pays cheque.Customer complains that bank paid unsigned cheque and had no authority to do so. Bank argues that ,since if he did not owe money to Inland revenue ,he would not have sent cheque to them in first place and refuse to refund.Matter goes through bank complaints procedure, Letter of deadlock is issued and referred to Banking Ombudsman.
Banking Ombudsman finds in favour of bank. The moral here is If it can be clearly proved that you intended to pay someone the bank can pay the cheque without a signature.I'm sure that readers here have forgotten to sign a cheque at one time or another but how many people know because they never see the cheque again after you issue it?

Eric