VOL NO REGD NO DA 1589

Monday, November 14, 2005

HEADLINE

POLITICS & POLICIES

METRO & COUNTRY

MISCELLANY

EDITORIAL

LETTER TO EDITOR

COMPANIES & FINANCE

BUSINESS & FINANCE

LEISURE & ENTERTAINMENT

MARKET & COMMODITIES

SPORTS

WORLD

 

FE Specials

FE Education

Urban Property

Monthly Roundup

Special on Logistics

FE IT

Saturday Feature

Asia/South Asia

 

Feature

13th SAARC SUMMIT DHAKA-2005

WOMEN & ECONOMY

57th Republic Day of India

US TRADE SHOW

 

 

 

Archive

Site Search

 

HOME

BUSINESS & FINANCE
 
Taskforce to probe cheque clearance
Tom Braithwaite, FT Syndication Service
11/14/2005
 

          LONDON: The Office of Fair Trading (OFT) is to lead a taskforce investigating the time that cheques take to clear, responding to concerns raised by small businesses which have argued that banks should speed up the process of clearing payments.
The competition watchdog stressed it was not certain there was sufficient appetite among business and consumers for it to compel banks to clear cheques more quickly. But an earlier investigation into electronic payments resulted in the banks agreeing to cut the time taken for them to clear.
The Association for Payment Clearing Services, representing the banks, said the inquiry only added to a welter of regulatory work for the industry.
The Payment Systems Task Force, chaired by the OFT and including representatives of banks, business and consumer groups, will carry out the inquiry, delivering its findings next summer.
In May, the taskforce reached a consensus on reducing the delay in clearing electronic payments, which had taken up to three days. Within two years from then, to give banks time to upgrade their IT systems, electronic payments will clear on the same day that they are made.
Mark Kram of the OFT said: "The reason we did electronics first is that it's growing in importance and to see whether people actually do want faster clearance."
Cheques, which take three working days to clear, are set to prove a stickier issue for the various interest groups to resolve.
They account for only 6.0 per cent of retail transactions and banks are reluctant to invest in speeding up a means of payment that is diminishing in importance.
But companies that are frequent recipients of cheques argue the current delay in clearing costs them money.
Stephen Alambritis, of the Federation of Small Businesses, said: "There is no excuse for banks to hold on to a cheque for three or four days. A cheque for 200 being [cleared] a day or two late could cause a small business to run into problems with their bank."
He said clearing should not take more than two days. Banks, which had "the profits and the resources" to absorb losses or pursue those who wrote bounced cheques, should "give small business the benefit of the doubt and get the money into their accounts". "Some very large companies can insist on credit cards only and can get away with it. In the small business world, [cheques] are still ... quite prominent," he added.
Apacs said: "What businesses say is they want to pay their suppliers by cheque, but they want to receive their money electronically."
The cheque inquiry was part of a "hefty agenda", it said. "We've got practically a whole department dealing with OFT-related issues, which costs banks money. As a parallel, looking at faster electronic payments is coming in at tens of millions."
Mr Kram said the OFT had no prejudice about the inquiry's outcome and suggested consumers and businesses might even find some benefit in the longer clearance period of cheques.

 

 
  More Headline
APEC leaders set for tough trade talks and protests
EU, Brazil trade chiefs try to ease WTO standoff
Bush under pressure to get straight answers from China
Iran overrules Islamic objections to foreign loans
Rich-poor meet to bridge digital divide
Possible hostile takeover of Malaysian bank sparks buzz
Taskforce to probe cheque clearance
APEC warns WTO talks could fail
China, Chile to sign free trade pact
Japan ministers reiterate need for sales tax hike
Greenspan's successor-to-be faces Senate quiz
M'sia Airlines top managers to take pay cut
HK relaunches world's largest property sale
 

Print this page | Mail this page | Save this page | Make this page my home page

About us  |  Contact us  |  Editor's panel  |  Career opportunity | Web Mail

 

 

 

 

Copy right @ financialexpress.com