Payment Council refuses to bow to pressure to restore cheque guarantee card, and says closure of scheme has had 'minimal impact' on those using cheques
Cheque guarantee cards will not be re-introduced, the body overseeing payments announced, after finding that the scheme's closure has had "minimal impact" on consumers and businesses.
In December 2009 the Payments Council, whose members include Britain's biggest banks, announced that cheques would be phased out by October 2018, claiming they were in "terminal decline". It also abolished the cheque guarantee card scheme from 1 July 2011, meaning it is now no longer possible to guarantee a cheque up to a maximum of �250 by handing over a card featuring the scheme's logo or hologram.
The body has since come under pressure to re-introduce the guarantee scheme, not least by a Treasury select committee (TSC) inquiry that found in August 2011 that the Payments Council was wrong to announce the abolition of cheques and should consider reinstating the guarantee cards.
The TSC inquiry, greeted warmly at the time by consumer rights groups, condemned the Payments Council further, calling it an industry dominated organisation which should no longer have the "unfettered power to decide the future of cheques or other payment methods that directly affect millions of people". It also said it would examine the Payments Council's structure and performance, including whether it was sufficiently accountable for the way its decisions affect consumers.
While the Payments Council has performed a U-turn on cheques, its refusal to reinstate the cheque guarantee card could be seen as a message of defiance in the wake of the TSC report.
The independent research, commissioned by the Payments Council and involving nearly 7,000 consumers and 2,000 businesses, found that, broadly, cheques are continuing to be used as they were before the guarantee scheme closed.
Prior to closure of the scheme, just under 10% of people had used a cheque guarantee card in the previous 12 months, rising to 12% of those aged 65-79 and 13% of those aged 80 or over.
Nearly nine out of 10 cheque users said that since the scheme closed, cheques were still accepted in the places where they had previously used the guarantee. Researchers also found that older people had been more likely to have their cheques accepted without being asked for a guarantee. Half of respondents aged 80 and over said they were expected to show their cheque guarantee card, compared with two-thirds of those aged 64 or younger.
The Payments Council is planning a campaign aimed at older people, who tend to use cheques more than other groups, to reassure them that cheques will stay.
Sandra Quinn, director of communications for the Payments Council, said: "The cheque guarantee card scheme will not be re-introduced. Our approach is: we've done some research, we've looked at the evidence and the evidence supports our conclusion."
Sarah Brooks, director of financial services at Consumer Focus, said: "Although the majority of people surveyed said they have not been affected, there has been an impact for some consumers from the removal of the cheque guarantee scheme. One in eight people using a guaranteed cheque said a business has now refused to accept a cheque from them.
"It is worrying that one in six businesses surveyed said they have stopped accepting cheques either because of the end of this scheme or for other reasons. Although use is declining, around two-thirds of consumers still cash and write cheques, and no alternative has yet been developed.
"The Payments Council must set out what action it will take to make sure cheques don't face an unmanaged and messy decline. We'd also like to see responsible retailers reconsidering their decision to stop accepting cheques."
Source: http://www.guardian.co.uk/money/2011/dec/20/cheque-guarantee-card-abolition-stay
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