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Last Updated: Thursday, 28 September 2006, 12:35 GMT 13:35 UK
Cheque-writing rules tighten up
Cheque being signed
Make sure you add the name or account number of the payee
Rules about how to write cheques are to be tightened from the start of October to help prevent fraud.

From now on cheque writers must include a name or account number as the recipient - rather than just a bank or building society.

The aim is stop cheques which do not make clear who they are intended for being diverted to thieves' accounts.

In 2004, this sort of fraud accounted for only 0.6% of all cheque fraud that was reported that year.

The Association of Payment Clearing Services (Apacs) says this meant that the actual amount of money lost was less than 1m.

Even so, the industry is keen to bring in the change.

"Although most of us are handling cheques less and less - on average, we only pay in one cheque every two months - this small change to the way we write them will have a big impact on fraudsters," said Paul See, chief executive of Apacs.

More bounced cheques?

From 1 October, banks and building societies will pay much more attention to cheques they receive which only specify them as the recipient, rather than an individual, company or account number.

If it is clearly the case that a person is simply moving money between two of their own accounts, then the cheques will still go though unquestioned.

An example might be someone using money in a building society savings account to pay off an overdraft in their bank current account.

And cheques that are used to pay off a credit card or utility bill will also be unaffected.

Already, card and utility companies usually ask for the account number to be written on the front or back of the cheque so they know to which account it should be credited.

The banking industry has decided not to make the new rules compulsory for these payments for fear of upsetting millions of people, by bouncing their cheques and leaving them with unpaid bills or unsettled credit card accounts.

However some people will find that certain cheques are sent back to them if, from now on, there is no name or account number identifying the true recipient.

For instance, if you are given a cheque from a friend or relative who owes you money, and you ask them to make it out to your bank rather than you personally, it will probably be returned.

Although nearly 1.9 billion cheques were written in 2005, only 1.5% were made out to the name of financial institutions and it is these that are the target of the new rules.

The changes were first announced in December 2005, and since then banks and building societies have been informing their customers with messages on statements, cheque books and literature in branches.

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