Banks bounced in cheques storm

The Treasury Select Committee said it was reopening its inquiry into the future of cheques after being “inundated” with public concern over plans to abolish them by 2018.

The UK Payments Council, which is made up of the major banks, announced in 2009 that cheques would no longer be used by October 2018, as long as viable alternatives had been developed.

But the committee, which held an inquiry into the issue last year, said it was unconvinced by the council’s argument that cheques were “in terminal decline”.

Bradford West MP David Ward, who has been fighting to save the cheque and recently presented a petition to Downing Street on the issue, he was “delighted” by the reopened inquiry. He wants the Payments Council to drop its target date of 2018 and monitor the continuing use of cheques, which have become used less as electronic banking has developed.

Mr Ward said: “This has struck a chord with a lot of people who have concerns about the proposals. This is really good news.

“This is clearly a matter of public interest. Look at the groups affected – there are many vulnerable groups, small businesses, the elderly, those without access to information technology. The banks shouldn’t be the ones who make the decision on this.”

Committee chairman Andrew Tyrie said he was “shocked” that the Payments Council had not conducted a rigorous cost benefit analysis of its plan when the first inquiry was held and called on it to “go away and do some number crunching”.

The reopened inquiry will look at trends in cheque usage over time, including projections on the number that will be written in the next five to 10 years.

It will also focus on the advantages and disadvantages of abolishing them and the impact this would have on particular groups, such as pensioners.

Other areas that will be looked into include the costs and benefits of abolishing cheques, progress on the development of alternatives and the Payment Council’s decision to close the cheque guarantee scheme this summer.

The committee will also be examining the structure and performance of the Payments Council, looking at whether it is sufficiently accountable for the way its decisions impact on consumers and how well it is delivering on its core objectives.

Mr Tyrie said: “The Payments Council has seemingly forgotten about the millions of people who are less at ease with the latest technology.

“We have been inundated by letters from the public telling us that they rely on cheques. Many charities, small business and vulnerable people – including pensioners – depend on cheques.

“Their needs must be considered. They should not be forced into shredding their cheque books.”

Charity Age UK welcomed the committee’s decision and Sarah Brooks, head of financial services at Consumer Focus, said: “It is very welcome that the committee are looking again at this issue given the concerns people have raised.

“Banning cheques could spell bad news for many who rely on them, especially older people, small businesses or the self-employed.

Although cheques are used less now they should only be phased out if there are proven alternatives that consider the needs of everyone who uses them.”

The Payments Council said it welcomed the opportunity to update the committee on the work that needed doing before it took a final decision on abolishing cheques in 2016.

Chairman Richard North said: “We remain committed to being fully transparent and to keep consulting with those who still rely on cheques.”