Cheque guarantees to be scrapped

torn cheque

The cheque guarantee system, which protects payments made using cheques, is soon to be abolished.

Consumers will still be able to pay with cheques, and businesses will be able to accept them, but from 30 June there will be no guarantee on amounts between £50 and £250, should the cheque bounce.

The decision was made back in 2009 because of the "terminal decline" in the use of guaranteed cheques over the past 20 years and was the result of a consultation with the Payments Council and other consumer groups.

If a cheque does bounce it will now be up to the business to contact the individual who wrote it to reclaim the money.

The use of cheques has fallen by 40% in the past five years and although four million people still use guaranteed cheques regularly, only a quarter of businesses have received one in the past six months and most say it's very rare to get one.


Jacqui Tribe, manager of the UK Domestic Cheque Guarantee Card Scheme, says: "The alternative was to let the scheme wither on the vine - which was more likely to have led to confusion, mixed messages and potentially exposing more customers to the risk of fraud."

This comes seven years ahead of the predicted date for cheques to be abolished altogether, although this decision is currently under review after the Treasury was inundated with complaints from consumers.

Sophie Kummer, spokesperson for the Federation of Small Businesses, says in all likelihood, because so many small businesses and individuals rely heavily on cheques, "they will continue to use them without the guarantee, which obviously makes things more difficult."

However, most major high street chains and petrol stations no longer accept cheques as payment.

The cheque card was introduced in October 1965, and guaranteed cheques up to £30. Since 1990, William Shakespeare has appeared as a hologram on these cards.

Read: The death of the cheque

Can I still use cheques?
Yes, you can still pay businesses for things with cheques but the amount will no longer be guaranteed by your bank.

Does this mean cheques I receive from other people will not be guaranteed?
Although businesses will be hit hardest by the changes, consumers will also lose protection. Previously cheques between £50 and £250 would have been covered. Now if a cheque from another personal individual bounced it would be down to you to reclaim the money through the courts.

Do I need to do anything now?
No. It is expected banks and building societies will remove the functionality from their cards on renewal and it will no longer be valid after 30 June.

What can I use instead?
Most cards that carry the guarantee are also debit or credit cards. You can use your debit card or cash to make a payment or continue using a cheque without the guarantee.

Is my money more at risk?
The changes are more likely to affect businesses because they use cheques far more regularly than individuals but anyone paying in a cheque that then bounces will have to then claim the money back themselves, which could result in going through court.