The end of Cheques? - Treasury Contents

Examination of Witnesses (Question Numbers 80-99)


16 MARCH 2010

  Q80  Chair: Internet banking?

  Ms Quinn: Internet banking fraud did go up. It went up from £50 million to just under £60 million, and that is an issue where we need to make sure that we provide secure payment methods going forward.

  Q81  Chair: And what about the cheque fraud?

  Ms Quinn: Cheque fraud figures went down in 2009 to just under £30 million. The cheque fraud figure is quite an interesting figure though, because what is behind that is the fact that about 95% of all cheques—

  Q82  Chair: So cheque fraud—

  Ms Quinn: Potential cheque fraud.

  Q83  Chair: Right, okay. Cheque fraud went down to £30 million but card fraud went down to £440 million and internet banking fraud went up to £60 million, so if you take the £440 million and the £60 million that in my figures is £500 million fraud but cheques have just got £30 million fraud, much less than 10%.

  Ms Quinn: The two figures are not comparable. The figure for card fraud is a gross figure.

  Q84  Chair: Make it comparable for us. That is why you are here.

  Ms Quinn: Okay. The comparable figure is that about 95% of all cheque fraud is caught before it becomes fraud, so the comparable figure would be about £600 million for cheque fraud.

  Chair: Alive in my mind is the £500 million and the £30 million.

  Q85  Mr Breed: Mr Locke, as independent director how many times have the four independents voted and obtained a veto on anything that the Payments Council has done?

  Mr Locke: We have not actually formally exerted the veto because we have not needed to, but the fact that it is there leads all the Board to recognise that when we speak our views have a particular weight, and there is a wide awareness that if we needed to operate the veto that would happen.

  Q86  Mr Breed: So effectively you have never voted?

  Mr Locke: We have not voted in quite those terms but, as I say, the availability of that sanction—

  Q87  Mr Breed: Everything that has gone through at the present time has gone through with no votes cast?

  Mr Locke: Views are expressed. I do not think we have necessarily had to cast a formal vote.

  Q88  Mr Breed: But no vote currently cast?

  Mr Locke: Have we ever done it?

  Q89  Mr Breed: So you have arrived at the position you are at at the present time without any votes being cast and so everybody has agreed with everything?

  Mr Locke: I do not think that is true at all. There are many areas where we have expressed views very forcefully and where the banks have taken notice. For example, when the decision was made on the cheque closure programme back in December I pressed very hard for recognition of the concerns in relation to vulnerable consumers, for full openness in relation to the criteria and how we develop them in terms of what is acceptable, and then transparency in applying those criteria to the eventual data, and finally I pressed hard to ensure that the banks did not use the decision as a smokescreen for withdrawing cheques before the 2018 deadline as part of their corporate policy. All those points were agreed, but I was very concerned about all of them before we could make a final decision.

  Q90  Mr Breed: Being concerned about them and being able to do something about it through the mechanism of the board seem to be two entirely different things.

  Mr Locke: We have effective mechanisms for dealing with them because we are able, if necessary, to vote to stop the whole thing going through.

  Q91  Mr Breed: But you have never voted.

  Mr Locke: We did not need to vote because people were well aware what the view was.

  Q92  Mr Breed: You chair the users group. You have identified charities, small businesses and perhaps older people. Who else have you identified as being groups that might be affected adversely by this decision?

  Mr Locke: I chair the Consumer Users Forum and that represents consumer interests. There are two other user forums, one dealing with small businesses and one dealing with larger businesses.

  Q93  Mr Breed: So small businesses, charities and older people, who else have you identified as a consumer that might be affected?

  Mr Locke: There are all sorts of consumers who have particular needs, not necessarily older people but people who do not speak English as their first language, people who are not happy using technology, people who only arrived in this country recently and set up bank accounts, a whole range of people who live in deprived or remote areas where there are limited facilities around, people who do not have internet access. There is a very wide range of different types of disadvantage which we have had to factor in.

  Q94  Mr Breed: So do you feel that you represent their interests?

  Mr Locke: It is my job to talk in detail to all of the people represented around the table at the Consumer Users Forum, to listen very hard to them—and there are a number of areas where they have had a major influence in what we have done—then to represent those views back to the board, which I do regularly. But, of course, in terms of my own decision and my own input into board decision-making, I reach my own views in the light of that.

  Q95  Mr Breed: Mr Smee, will any change in the system require legislation?

  Mr Smee: We believe not, no.

  Q96  Mr Breed: So, in fact, Parliament would not need to be involved in any of this decision-making on behalf of the whole of the country. Do you think Parliament should through legislation give some effect to any changes, bearing in mind the enormous range of effects it is going to have on businesses, consumers, the economy and everything else?

  Mr Smee: I do not believe there is a need to legislate in this area although I am sure this Committee will have a continuing interest in what is an eight-year project.

  Q97  Chair: Sandra, we go back to what you said. You said that the figure for cheque fraud would have been far higher if attempted fraud had not been detected and the cheques stopped. Is that correct?

  Ms Quinn: Yes. About 95%.

  Q98  Chair: Is that not just another way in which cheques are safer?

  Ms Quinn: I think the key is that there are some losses for cheque fraud that are not in the £30 million figure.

  Q99  Chair: If I may intervene, cheques are safer now so you are preventing fraud being even higher, so it has to be a good thing?

  Ms Quinn: If you speak to lots of other businesses, they see that cheque fraud is a rising risk that they are concerned about.

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