MPs reconsider ban on cheques

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Public concern over the proposed withdrawal of cheque payments by 2018 has led a Commons committee to reopen its inquiry.

Following pressure from consumer groups and charities, the Treasury select committee has decided to invite new evidence and called for anyone adversely affected by the proposed abolition to write to the committee.

The inquiry will focus on how the abolition of cheques will impact on millions of vulnerable individuals in society, small businesses, charities and hospices.

In December 2009 the UK Payments Council announced that cheques would be phased out by October 2018, but that this would happen only if alternatives were developed.

The cross-party group of MPs launched an inquiry in February 2010 on the future of cheques and took evidence from a number of organisations, including the UK Payments Council.

MPs said they had been unconvinced by the Payment Council's argument that cheques were "in terminal decline".

Committee chair Andrew Tyrie said: "The Payments Council had seemingly forgotten about the millions of people who remain less at ease with the latest technology.

"Since our last inquiry we have been inundated by letters from the public telling us that they rely on cheques. Their needs must be considered. They should not be forced into shredding their cheque books.

"We will also want to examine whether it is in the public interest that apparently competition, can and should, be set aside on this.

"I was shocked, when the Payments Council last gave evidence, that they had not conducted a rigorous cost benefit analysis.

"We asked them to go away and do some number crunching. In this new inquiry we can now examine their latest conclusions and work."

The new inquiry will look at the advantages and disadvantages of phasing out the payment method and the impact this would have on particular groups, such as pensioners.

Age UK welcomed the Treasury committee's decision and said it had heard from many older people who were "really worried" about the issue and were unsure how they would cope without the payment method.

Michelle Mitchell, charity director at Age UK, said: "Scrapping cheques without there being a suitable replacement is not acceptable.

"If you find it difficult to leave the house, then cheques are often crucial in allowing you to pay bills securely and safely.

"Taking that option away could leave many vulnerable older people with no choice but to hand over their pin numbers and cash cards to others, going against all the guidance given by banks."

The Payments Council said it welcomed the opportunity to update MPs on the work that needed doing ahead of its decision on abolishing cheques.

Payments Council chair Richard North said: "This inquiry enables us to reassure consumers and business that cheques will not disappear unless we deliver in our commitments to make sure that acceptable alternatives are in place and available."

The Treasury committee is calling for written evidence from interested parties until Friday May 6 and expects to publish its findings later this year.