new cheque clearing rules

[icenian]

Apparently from next week (1 December 2007) there are new rules for clearing cheques, so that after 7 working days the funds can't be claimed back. Until now, the money can be clawed back if the cheque bounces, which can happen after your bank statement lists the funds as "cleared".

I think the best known scam, which has been used against people selling their bikes in MCN etc., is where the buyer "accidentally" sends a cheque for too much money. They ask the seller to cash it (to "avoid delays in posting another one"), let it clear, and to refund the difference. That sounds very reasonable and totally safe, if you don't realise the "cleared" cheque can still bounce a week or two later! The "buyer" never collects the bike, they just make off with the "refund" the seller sent them.

El Reg says this is important for online sellers, but I should think it affects anyone selling high value stuff, like Africa Twins. So not Flabaderos or BMWs, obviously
http://www.channelregister.co.uk/200...rance_changes/

Disclaimer: I'm not a financial or legal expert, I just read the story. YMMV.

[Hagrid]

El Reg says.....

Yippee a fellow Reg. Reader

How many BOFH T's you got dude...?

[chronyx]

BOFH

Aaaah many a work day spent reading the archives

[samwise]

Full APACS press release (yes, I get them all - most are very boring!)

For immediate release 26.11.07

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

The UK banking industry has today (26 November 2007) announced the start date for changes to cheque clearing processes. The changes, known as 2-4-6, are a major development that will benefit anyone who accepts a cheque, banker's draft or building society cheque. The changes will apply on all cheques paid in to major banks and building societies in the UK with effect from this Friday (30 November) onwards. The changes will deliver two benefits for customers:

Increased certainty - For the first time, after paying in a cheque, customers can be sure that at the end of six working days, the money has safely cleared and they are protected from any loss if that cheque should subsequently bounce*.

Improved clarity about clearing timescales - The changes set maximum timescales for the day that customers can expect to earn interest, or when the balance on which overdraft interest is charged is reduced (no later than two working days after paying in a cheque). They also set maximum timescales for the day when money can be withdrawn (no later than four working days after paying in a cheque). Banks and building societies will still compete to offer services that beat these guaranteed limits.

In research commissioned by the Cheque and Credit Clearing Company**, less than a quarter of cheque users surveyed knew the correct timescales for cheque clearing, and more than half were worried about accepting cheques for fear they may bounce.

The 2-4-6 changes address these uncertainties, and provide guaranteed maximum time limits on cheque clearing to help businesses and personal customers decide how best to manage the cheque payments they receive. Angela Thomas, Cheque and Credit Clearing Company Managing Director, said:

"Although cheque use has fallen over the last few years, cheques remain important for certain customers in certain situations. Whether it's a small business or someone selling a car, there are many occasions where cheques still get handed over. These changes will really benefit anyone paying in a cheque, offering them certainty and clarity on when the money has cleared and giving real peace of mind."

Despite the positive change, the industry continues to remind customers to be wary of accepting cheques if they don't know or trust the person offering them the cheque. Other options include CHAPS or making an online or phone payment.

Any customer who is uncertain about clearing timescales for a particular cheque should check with their bank or building society.

To explain the changes, the Cheque and Credit Clearing Company and APACS have issued downloadable advice guides and a range of information for personal and business customers, available free from their websites, www.chequeandcredit.co.uk and www.apacs.org.uk.

These changes cover cheques, bankers' drafts and building society cheques drawn on and paid into a UK current or basic bank account. For saving accounts the maximum time limit for withdrawal is longer (six days instead of four). Basic bank account holders are likely to be able to withdraw cash more quickly than before as a result of these changes. Small businesses will benefit from the certainty of funds for managing their cash flow, and for deciding when to release goods and services that are paid for by cheque.

* Unless they are a knowing party to fraud
** Banking Omnibus Survey (TNS 2007)


ENDS

[Whealie]

How come, though, an electronic bank transfer still takes as long as a cheque for the funds to transfer.
Banking makes Labour Party Funding look squeaky clean.

[Highwayfive]

I am sure that they are going to change the electronic money transfer times as well.

The www.chequeandcredit.co.uk

Information on cheque clearing and bankers drafts.