New rules for banks on processing cheques

New rules mean that banks must now clear cheques within a set period.

The rules, which come into effect on 30 November, require that interest on money paid in by cheque be credited within two days of the cheque being presented.

The money can be withdrawn four days after a cheque has been paid in, while the money will be guaranteed the customer six days after the cheque has been presented, even if it subsequently bounces or proves fraudulent.

In the past, banks have been able to reclaim money at any time from a customer’s account in those cases where cheques were fraudulent.

The changes to the cheque clearing system are the result of a review by the Office of Fair Trading.

Despite the decline in the use of cheques, some 270 million payments were made by cheque in the three months from June to September this year.

The new rules were drawn up by Apacs, the payments clearing organisation, and the Cheque and Credit Clearing Company.

As from 30 November, businesses and individuals will know that they are free to spend money deposited in their accounts from a cheque transaction after six days.

Angela Thomas, managing director of the Cheque and Credit Clearing 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 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.”