British MPs Step in to Rescue the Cheque from the Payments Council

World of Plastic readers based in the States will no doubt be shocked and horrified to learn that the good old reliable cheque payment system has been coming under attack this side of the pond.

 

Use of the cheque has indubitably been in steep decline for a number of years here in Britain, where banks are eager to get rid of it all together in favour of higher-tech and more cost-effective (for them!)  payment methods, such as debit cards and online banking. 

Cheered on by the UK Payments Council, a private, non-elected body which sets the strategy for UK payments, the banks have been pushing hard lately to get rid of cheques,  and pronounced  that cheque guarantee cards would no longer be accepted from June 2011.

I first reported on this issue back in June, in ‘The Death of the Cheque’ http://charlottemooney.blogspot.com/2011/06/death-of-cheque.html

Back then the Payments Council was already having second thoughts about abolishing the cheque, and was  back-pedalling on its 2009 announcement that the cheque would disappear from the UK completely by 2018.  This proclamation was quickly and emphatically greeted with a storm of protest from angry cheque-using customers.  The Payments Council was probably taken aback by the clout wielded by the major categories  of cheque-users, such as the elderly, charities and small businesses.

British MPs climbed onto the bandwagon and have also been up in arms about the abolition of the cheque, and now the Commons Treasury Committee has intervened to secure the future of the cheque system.  In its report The Future of Cheques, published today, it urges banks to write letters to all their customers reassuring them that cheques will remain in use for the foreseeable future.  It further recommends that banks consider the reintroduction of the cheque guarantee card.

The Payments Council itself also comes in for some criticism.  The report says that it should be brought within the formal regulatory system because:

‘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.’

I wonder what would happen if banks tried the same stunt in the US. The cheque is still so ubiquitous over there, getting rid of it would probably cause a revolution. If I was a banker I think I would be a bit worried about becoming even more unpopular than I already am…