Member News
By Philippa Silverman - 24th August 2011
A group of MPs has said the uproar over scrapped plans to phase out cheques could have been averted.
The Commons Treasury select committee wants to strip the Payments Council, whose members include Britain's biggest banks, of its power to cancel cheques and other payment methods in the future.
And they have called for the council, set up in 2007 to speed up UK payments, to reconsider its move to axe the cheque guarantee card.
After mass public criticism, last month the Payments Council reversed its plan to end the use of cheques by 2018 following a campaign by MPs and consumer groups.
It said cheques would continue to be in use "indefinitely".
In its report, the Treasury committee found that millions of customers, small businesses and charities would be left without an alternative if the payment method was abolished.
It said banks should write to all of their customers stating that cheques will continue to be honoured for the "for the foreseeable future".
The committee recommended the proposed Financial Services Bill should include powers to allow the new Financial Conduct Authority to "intervene to protect bank customers by prevent checks being withdrawn".
Committee chair Andrew Tyrie said: "Cheques have been saved, for the moment, but we need to remain vigilant. The incentives for the industry to get rid of cheques has not gone away.
"The Payments Council is an industry-dominated body with no effective public accountability.
"It should not have unfettered power to take decisions on matters, such as the future of cheques, or other issues, that are of vital importance to millions of people.
"This is why we have recommended that the council be brought within the formal regulatory system."
Financial secretary to the Treasury Mark Hoban said the government will look carefully at the committee’s recommendaitions.
"The Payments Council ultimately did the right thing by abandoning their plans to abolish cheques.
"However, the way they handled this decision does raise questions about the governances of the Payments Council."
Michelle Mitchell, charity director of Age UK, which campaigned for the future of cheques, welcomed a review.
She said: "It is a chance for banks and building societies to live up to their word and prove that the future of cheques is safe."
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