More time to check your cheque

Changes to the cheque clearing process in the UK will help end some pervasive frauds and bring clarity to consumers.

From the end of business on Friday, 30 November, the changes, known as 2-4-6, mean that after paying in a cheque, bank customers can be sure that at the end of six working days, the money will have safely cleared.

People are for the first time protected from any loss if that cheque should subsequently bounce, even if it is weeks later.

The changes could mean a huge decrease in the types of cheque fraud prevalent on auction sites or through online or published classified adverts; typically where a criminal tries to buy high-value goods such as second-hand cars using counterfeit or stolen cheques.

Typically the fraudster will offer you a cheque or bankers’ draft for more than the price of the goods. You are then asked to transfer the amount of the overpayment to a third party after three or four days, when, it is claimed, the cheque will be cleared.

However, even though funds can appear in peoples' accounts after a couple of days, this doesn't mean the cheques have cleared. The victim who sends the amount that has allegedly been 'overpaid' back to the 'buyer' finds they have lost hundreds of pounds and sometimes the goods they were selling as well.

Andrew Goodwill, director for the 3rd Man Group (and Early Warning), believes the new rules will benefit both buyers and sellers on auction websites.

He said: "People should be safer with these new rules as long as they don't send off goods before the end of the six days. Ebay sellers, for example, also have more guarantee of payment than they do if they use Paypal and don't have to pay a fee.

"Buyers meanwhile have the Banking Code of Practice to protect them from fraudulent sellers, either retailers or on auction sites, although they have to remember it will slow down delivery."

The changes cover cheques, bankers' drafts and building society cheques d rawn 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). As well as more security the changes bring clarity for the consumer.

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.

Angela Thomas, managing director of the company, 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 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 do not know or trust the person offering them the cheque. Other options include CHAPS or making an online or phone payment. Anyone uncertain about clearing timescales for a particular cheque should speak to their bank or building society.

To explain the changes, the Cheque and Credit Clearing Company and payments organisation Apacs have issued downloadable advice guides and a range of information for personal and business customers, available free from their websites.