Cheque guarantee system will not return

21 December 2011

No case exists for the return of the cheque guarantee card system, according to the Payments Council, which oversees UK payments.

The system, which guaranteed personal cheques up to £50 or £100 would be honoured even if sufficient funds weren't in the writer's bank account, ended in June. But despite the Commons Treasury Committee saying the loss of the system could lead to the death of the cheque, the Payments Council maintains that the system is not needed.

Cheques continue to be accepted by businesses, with a survey for the Payments Council showing that 84% of businesses still take cheques even without a guarantee.

"We have committed that cheques are here to stay, so we were pleased that the demise of the guaranteed cheque has had little impact on the way people use cheques, nor has it stopped businesses accepting them," says Adrian Kamellard, chief executive of the Payments Council.

However, not everyone is happy about the Payments Council's decision. "Any decision to reduce the use and availability of cheques would be bad news for some of the most vulnerable members of our society," says Andrew Tyrie, MP and chairman of the Treasury Select Committee, about the decision not to bring back the guarantee system.

"We will be looking at the Payment's Council's report in detail and may ask it to come to give evidence in the New Year.

"The Payments Council must do more to ensure that banks do not phase out cheques on the quiet," he adds.

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