Cheques could still have a future

Posted on June 16th, 2011 | Categories - Financial News

The humble chequebook could have a future after all.

If a viable alternative could be found, the UK Payments Council had planned to phase out cheques by 2018. However a government minister has now made an intervention which could see the plans change.

Writing to the Treasury Committee hearing into the future of cheques Mark Hoban, Financial Secretary to the Treasury, stated that there until an alternative had been fully tested there was no “credible or coherent case” for the abolition of cheques.

Committee

The Treasury Committee had considered the proposed abolishment of cheques some time ago, but after negative feedback to the idea had reopened the debate.

The committee criticised the way in which the UK Payments Council has handled the matter:

Committee Chairman Andrew Tyrie, said “It is an appalling mess. It is a scandal. This is even worse than a colossal error of judgement,”

Committee member David Ruffley added, “This has scared the pants off middle England.”

Usage fallen

The usage of cheques has fallen in recent years by around 70%, however 1.1 billion cheques were still written in 2010.

In his letter to the Treasury Committee Mr Hoban highlighted the effect that abolishing cheques would have on the elderly, small businesses and the rural community.

Mr Hoban went on to say: “Regrettably, the announcement was made without an assessment of the costs and benefits, or a plan or timetable for managing the process, or an indication of what alternative payment instruments might need to be created,”

“The result has been to create a great deal of uncertainty and alarm across the country.”

Response

In response to the criticism Richard North, Chairman of the UK Payments Council, said that there had never been any intention of abolishing cheques until an adequate alternative was available.

Mr North suggested that alternatives could include the use of mobile phones, and that a paper based alternative could also be put in place.

He did however admit that the message from the Payments Council had not been communicated well.