Banks: Cheques

Lord Naseby Excerpts

Monday 6th June 2011 Lords Chamber

Asked By

[Lord Naseby]

To ask Her Majesty’s Government what is their response to the proposed withdrawal of cheques by the banks.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Payments Council has made a clear statement that cheque facilities will continue to be available until the alternatives that are put in place, including a paper-based system, are available, acceptable and widely adopted. Many users continue to rely on cheques, particularly small businesses, charities and the elderly. The Government believe that cheques should not be phased out unless suitable alternatives are in place for all users.

[Lord Naseby]

Is my noble friend aware that the Payments Council is little more than a bankers’ quango? Is it not extraordinary that this proposal takes no account of the Federation of Small Businesses, which has 200,000-plus members, who are totally against such a change? It takes no account of the hundreds of thousands of clubs, and their treasurers, up and down the country—I declare an interest as treasurer of the Lords and Commons Tennis Club. Furthermore, there are certain technical issues in the City, where those who fail to take up a rights issue have to be presented with a cheque and where, for takeover bids that fail, there has to be a cheque drawn. There are myriads of activities that require cheques, affecting tens of millions of people. Is it not time that the bankers for once thought about the public? Should not the Government consider putting further pressure on the Payments Council to make sure that cheques remain a normal method of doing business in this country?

[Lord Sassoon]

My Lords, it is correct that the Payments Council is an industry body. It is the banks and the other industry players who pay for and maintain the payments system, but it is a body with a chairman and four other independent members, and the Bank of England is an observer on the board. Back in December 2009, the Government welcomed the commitment made by the Payments Council, which was clear that if it took a decision in 2016 to end the present system of cheque clearing in October 2018—and it will take that decision only in 2016 if it does so at all—it will do so only if there is an available, acceptable and widely adopted alternative system. The Government have been clear that that must include a paper-based system. We believe that it is appropriate to continue to work closely, as we do, with the Payments Council to make sure that it is held to the commitments that it has given. The council is consulting users widely and has another round of consultation running now, and it will I am sure continue to take note of the important views of all users of cheques.