Treasury Committee says future of cheques safe for now

Wednesday, 24 August 2011 09:34

A report by a Treasury Committee into the future of cheques has concluded that The Payments Council should not have the power to decide the future of cheques or other matters that are of vital importance to consumers.

Plans to phase out the use of cheques by 2018 have been withdrawn despite the fact that the use of cheques has fallen by 70 per cent since 1990.

The Treasury Committee says in its report that cheques should be improved and that the “delays and uncertainties” surrounding cheque payments should be reduced. MPs have also called for The Payments Council itself to be overhauled.

The Chairman of the Treasury Committee, Andrew Tyrie, said: "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."

However, The Payments Council has said that it is conducting its own review into how it is governed later this year. In July, The Payments Council abolished its plans to phase out cheques after a public backlash against the idea.

The treasury Committee said in its report that the initial plans to abolish the use of cheques had caused unnecessary concern amongst bank customers and that banks must now guarantee a strong future for cheques.

Sarah Brooks, Director of Financial Services at Consumer Focus said: “Payment systems can be seen as a utility in the same way as the railway network or National Grid. They should be subject to effective regulation and decision-making to make sure the system works well for everyone who needs them to pay for goods and services.”

The Treasury Committee recommended in its report that banks should write to customers telling them that cheques will be in use for the foreseeable future and that there should be an overhaul of the board members and that greater powers of veto should be given to independent members.

Andrew Tyrie said: "The decision of the Payments Council in December 2009 to set a target date of 2018 for the abolition of cheques was taken without an assessment of the costs and benefits and without providing any indication of what alternatives to cheques would be put in place."

"Banks have also given many customers the impression that the abolition of cheques was a foregone conclusion. This type of behaviour is unacceptable and cannot be allowed to continue."

"The Payments Council's decision caused great and unnecessary concern among bank customers. And during the course of the Treasury Committee's inquiry it became clear that the Council's plans did not have the confidence or support of the public, Parliament or the Government."

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