Banks 'Unpaid Cheque' Policy - Help!

Grandad52

Can anyone help me with this please?

Some weeks ago i received a cheque for goods sold for almost £2000.
I paid the cheque into my bank account the next day.
Seven working days later, i checked my account and the cheque had 'cleared' and the money was available.
I then released the goods.
Four working days later i received a letter from my bank - 'the enclosed cheque has been returned unpaid by the drawers bank. The reason for return has been written (actually stamped) on the front of the cheque - ACCOUNT CLOSED'
I contacted my bank immediatley, and although they were and still are very sympathetic, they confirmed that it was unusual for a cheque to be 'cleared' and then later returned unpaid. They obviously suggested i contact the drawers bank - Royal Bank of Scotland. I have now written to them twice over the past three weeksand not had a reply.
If it is true that the account is indeed closed, then surely they are at fault for initially releasing the funds, and then claiming them back some days later when they realise there error?

There is another point also regarding the use of a cheque account knowing it to be closed. I have discussed this with the police.

I apologise for not using the correct banking terminology, but i hope you understand the content.

Any help would be appreciated

Somerset

Grandad, I'm sure 'banking' people will respond with more precise info. What I wanted to say was , the company I work for had a cheque 'bounce ' on them about six weeks after it was banked. Our bank was Barclays. When we queried it, Barclays waffled and basically said there was no set time limit. It seems increadible but that was their party line.

Good Luck.

newfoundglory

Yes, its true, you can never be sure if a cheque has "cleared", nor can you ever be sure if the cheque will be returned. However, "cleared" is the wrong word. The question you want to be asking the bank is "can this cheque return unpaid?", as they are two very different things. However, i doubt they would answer that question for you!

Unfortunately, I would say that 7 days simply isn't long enough to be sure. I would wait at least 21 days (15 full bank working days) before assuming that the cheque will not be returned (if I was selling something on ebay i would implement this requirement). However, even with 21 days you can't be sure, but its hightly unlikely after this timeframe that it would bouce. Of course, it can, and notification of that can be delayed as Somerset has pointed out - however those cases are rare.

jonesMUFCforever

Grandad52 wrote:

Can anyone help me with this please?

Some weeks ago i received a cheque for goods sold for almost £2000.
I paid the cheque into my bank account the next day.
Seven working days later, i checked my account and the cheque had 'cleared' and the money was available.
I then released the goods.
Four working days later i received a letter from my bank - 'the enclosed cheque has been returned unpaid by the drawers bank. The reason for return has been written (actually stamped) on the front of the cheque - ACCOUNT CLOSED'
I contacted my bank immediatley, and although they were and still are very sympathetic, they confirmed that it was unusual for a cheque to be 'cleared' and then later returned unpaid. They obviously suggested i contact the drawers bank - Royal Bank of Scotland. I have now written to them twice over the past three weeksand not had a reply.
If it is true that the account is indeed closed, then surely they are at fault for initially releasing the funds, and then claiming them back some days later when they realise there error?

There is another point also regarding the use of a cheque account knowing it to be closed. I have discussed this with the police.

I apologise for not using the correct banking terminology, but i hope you understand the content.

Any help would be appreciated

1 When you checked your balance it showed the cheque as available to you NOT cleared. We are always taught to tell customers that a typical clearing cycle is 5 days ie pay in monday available to withdraw friday, but we should never tell you that a cheque is cleared because we never know if it is or not.
2 I would see your local bank manager who at the very least could find out some info from the drawers bank. A telephone call to the account holding branch may reveal some handy info.
3 If there is fraud involved then it is unlikely that they will recompense you and you should inform the police and ask them to investigate.
4.I could also sugest that a solicitor's letter to the account holding branch asking why they bounced the cheque so late, (although you will incur his charges and you may be throwing more money down the drain)
5 This is just a longshot but if the account holding branch have been negligent in not returning the cheque in time then you could claim the money off them, but how you would manage to do this is debatable. If the cheque was paid in over a bank counter on monday it would hit the account on wednesday and if they wanted to return it they would have to do this on thursday or at the latest by 12 noon on friday.If it has been returned 'late' by RBS then they should have telephoned your bank to advise and your bank would have a record of this call (names are exchanged). If they have done everything by the book and the delay is down to a postal delay then I'm afraid you could be sunk.
Eric

Alfie_E

newfoundglory wrote:

..."cleared" is the wrong word. The question you want to be asking the bank is "can this cheque return unpaid?", as they are two very different things.

The question translated into Bankese is "Has the cheque been given value?" See, When has a cheque cleared?

Fatboy_NSS

As a 'banking' person (cheers Somerset) I can only confirm that what the bank told you is true. A cheque doesn't actually clear for 6 months - your bank will release the funds after a certain number of days but will take the money back if the cheque is subsequently returned unpaid. Unfortunately you don't have any claim against the account holding branch as they were well within the 6 month time limit.

JanCee

Fatboy_NSS wrote:

As a 'banking' person (cheers Somerset) I can only confirm that what the bank told you is true. A cheque doesn't actually clear for 6 months - your bank will release the funds after a certain number of days but will take the money back if the cheque is subsequently returned unpaid. Unfortunately you don't have any claim against the account holding branch as they were well within the 6 month time limit.

This isn't correct.

When a cheque is paid in it reaches the account holding bank in 3 working days, they make a decision that day whether to pay or return. The only exception to this is for lack of funds, they can give the account holder up to midday the next day to pay in to cover, the cheque can then still be returned as a "late return".

For "Account closed" however the cheque would have been returned on the day it was received by the account holding bank. Unfortunately unpaid cheques are returned by post and that usually accounts for the delay in finding out about it.

Banks are certainly not able to return cheques within 6 months if they have previously been paid, that would cause absolute chaos and I can't imagine where anyone has got this idea from.

To the original poster - you have been the victim of fraud I'm afraid.

amandathepanda

The only way to be sure about funds being paid is to ask for a bankers draft instead of a cheque, this way the persons account is debited before they are given the draft.The other alternative is to pay to have the cheque specially cleared.
I have read a lot of complaints on these boards about bank clearance cycles, but it is for reasons like this that they insist on customers not drawing on the cheque until at least the 5th working day. Even after this amount of time it can't be guaranteed as the cheques are returned via the postal system.

Fatboy_NSS

JanCee wrote:

This isn't correct.

Yes it is, but I think we're making slightly different points. You're right that a cheque can't be returned upnaid when it's already been paid. However banks release funds without necessarily knowing if the funds have been paid, and the cheque can be returned by the drawers bank up to 6 months after it's submitted for clearing. It's pretty much unheard of for cheques to take this long to be bounced, but it is the time limit (and the reason you won't hear bank staff referring to cheques as cleared, but rather as funds available).

JanCee

We are not going to agree on this Fatboy-NSS. Cheques are not able to be returned up to 6 months after they are submitted for clearing - where would they be held? The system is that the cheque is paid into the bank of the payee on Day1, central clearing Day 2, drawer's bank on Day 3 (working days only not including Sat & Sun) then usually paid, or returned to payee's bank by post if unpaid for any reason. That is the clearing system, slow and unreliable for unpaids, and people who use cheques for fraudulent purposes know exactly how it works, which is how the original poster has been caught out.

The only exception to this I can think of is for cheques drawn abroad either in foreign currency or sterling.

Chadsman

I think confusion is arising on the meaning of the word 'return' refering to the payers bank or the payees bank.

As I understand it...
the payers bank can send back a cheque as unpaid which it is supposed to do no later than the day after receiving it, but it may then 'get lost' in the post and it is that potential delay that is being refered to when talking about 6 months.
I speak as a layman with no special knowledge on the matter... that may be total codswallop :rolleyes: :beer: