Press Releases
BCCA chief executive gives evidence to Treasury Select Committee on abolishing cheques
Tuesday 16 March 2010
The chief executive of the British Cheque & Credit Association, Geoff Holland, today gave evidence to the Treasury Select Committee's inquiry into the UK Payments Council's plan to abolish the cheque clearing system in 2018.
"Almost 3.5 million cheques are currently issued every day, with an average value of £994," said Mr Holland. "Many SMEs, charities, clubs, societies and voluntary organisations still consider cheques the most convenient method of making and receiving payment, as do the elderly and housebound.
"The Payments Council, which is made up of major banks and some other payment service providers, wants to reduce the cost of the cheque clearing system without balancing this against the needs and convenience of cheque users.
"The last thing consumers want is less access to banking services, which may well be the ultimate result if abolishing cheques makes the bank branch network less viable and leads to branch closures. And piling more costs onto hard-pressed small businesses, which may not have the financial or staff resources to make all their payments electronically, is not going to help the struggling economy.
"The Payments Council claims cheque use is falling while the cost of processing cheques is rising. Their figures do indicate that only around two million cheques will be used each day by 2017. However, this decline is expected to level off from 2017 onwards. It is, of course, far less costly for banks to process wholly electronic payments but this should not be the main driver for the phasing out of cheques.
"Rather than introducing an alternative paper system, as was recently suggested by the Payments Council, why not simply scale back the existing cheque clearing system to reflect the reduction in volumes? If the banks do then develop alternatives to cheques which offer genuine cost savings and are just as flexible and convenient, customers would migrate from cheques by choice rather than being forced to do so."
Mr Holland also called for an independent body to have the final say on whether or not to close the cheque clearing system in 2018: "Bearing in mind the vested commercial interests of many of the Payments Council's members in abolishing cheques, we feel that any decision should be made by an independent organisation such as the Treasury, Office of Fair Trading or Financial Services Authority."
Ends
The British Cheque & Credit Association (BCCA) represents around 800 businesses who offer third party cheque cashing services and short term unsecured loans where the repayment period is 6 months or less. This includes pay day loans. Members range from quoted public companies to sole traders, and they provide a high quality service to their customers.
For further information please contact Jill Hulme on 07913 278514.
