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Last Updated: Monday, 26 November 2007, 15:00 GMT
Cheque payments given certainty
Writing a cheque
People can now rely on cheque payments after six days
Bank customers will now be able to rely on cheques which have been paid into their accounts, even if the cheques later bounce or prove to be fake.

From 30 November, cheques will clear with absolute certainty, six days after being paid in.

Previously, banks were able to recoup money from a customer's account if they discovered the original cheque payment was fraudulent.

The changes to the banking system were decided by the industry a year ago.

The problem of cheques never clearing was first revealed by the BBC Moneybox programme three years ago.

Subsequently the Office of Fair Trading put pressure on the banking industry to clarify the clearing system.

Big change

Contrary to common belief, banks have always been able to recoup money from a customer's account if a cheque bounced or proved to be fraudulent.

This was the case even if the discovery took place weeks or months after the event, and after the cheque had been formally cleared and the money spent.

In other words, cheques never really cleared with absolute finality. That will change from the end of the month.

"The big change concerns certainty of funds," said a spokeswoman for the banking organisation Apacs.

"It's only in the last few years that it has become an issue due to organised gangs getting into cheque fraud."

Although overall cheque fraud has been falling - from 46m in 2004 to 31m last year - it has become a bigger problem for certain groups of bank customers.

Among them are businesses who hand over their goods only to find later on that the cheque used to pay for them was dud.

The problem affects people selling items on the internet via ebay or who sell cars via Autotrader.


The banking system is also clarifying the maximum times for banks to credit cheque payments to people's bank accounts.

From 30 November, interest will be credited no more than two days after paying in a cheque and the money will be able to be drawn out after no more than four days.

Some banks have already decided to speed up their own procedures independently.

Last year for instance, Lloyds TSB started crediting interest to its customers' accounts immediately.

Most high street bank customers will see little change in practice.

But some building society customers will see interest credited faster than before, while people with just basic bank accounts will be able to take their money out faster.

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