Written evidence submitted by the Communication
Workers Union
I am writing to express the CWU's concerns at
the UK Payment Council's announcement of its intention to phase
out the use of cheques. While recognising there has been a decline
in the use of cheques in recent years, we believe they continue
to be of importance to a significant minority of the population
and that viable alternatives are not in place to make the phasing
out of cheques an acceptable course of action.
The CWU represents around 250,000 employees
in the postal, telecoms and financial services sectors. Moreover,
we represent 300 people employed by Intelligent Processing
Solutions Ltd (iPSL), a joint venture between Unisys, Barclays,
HSBC & Lloyds TSB and the leading cheque-clearing operator
in the UK.
Clearly, as a representative of employees engaged
in cheque-clearing, we have concerns over the impact the UK Payment
Council's decision will have on their jobs and for employment
in the banking sector more generally. iPSL operates large sites
in Bootle on Merseyside and Northampton and its operations contribute
significantly to the local economies. We are keen that consideration
should be given to the future of employees in the sector when
any decision on the phasing out of cheques is made.
We recognise that there has been a significant
decline in the use of cheques in recent years and we welcome new
technology that improves the efficiency of financial transactions
for the public. However, we do not believe it follows that the
option to pay by cheque should be phased out; it remains a secure
and practical payment method for many.
For a large number of individuals, small businesses
and sole traders, payment by cheque remains the most effective
option. There simply are not appropriate alternatives. Acquiring
the technology necessary to accept electronic payment is prohibitively
complicated for many sole-traders and small businesses. This leaves
payment by electronic transfer or cash. Payment by electronic
transfer requires an exchange of bank details and is burdensome
for the consumer. It is also far from being a commonly-used transaction
by many consumers. The alternative, moving to further payment
by cash because of the artificial demise of the cheque, would
be a step backwards for many small businesses, creating a security
risk and increasing the burden of administration.
We also believe that the phasing out of cheques
will have a disproportionate impact on certain sections of society,
particularly the elderly and those on the margins of financial
inclusion. For many elderly people, using bank cards and chip
and pin services is difficult. Remembering a pin number and paying
by card is not always an option. As we have seen through the introduction
of direct payment of benefits and pensions and the Post Office
Card Account, many people find these services difficult to adjust
to and consequently remain dependant on friends, family and Post
Office staff to assist them with transactions. And while many
elderly and financially excluded people may have made the transition
to payment by card for face-to-face transactions, for non-face-to-face
transactions payment by cheque often remains the only option.
Direct debit, telephone and internet payment,
while an alternative to cheques for many, are beyond the experience
of some people and being limited to such options could be a cause
of great concern. Direct debits are often not possible for those
on low incomes. Paying by cheque remains a simple and efficient
alternative.
Telephone and internet banking presuppose a
degree of technological and financial literacy. While it is desirable
that all should have access to such services it is unlikely that
this will be achieved in the near future and unlikely that it
would be achieved by removing access to financial transactions
by cheque. As the Committee itself pointed out in its 2006 report
"Banking the Unbanked", almost two million households
in Great Britain were without access to a bank account. Given
this degree of financial exclusion it does not seem that the UK
is ready to embrace a system of solely-electronic financial transactions.
To do so would be to leave behind those who are already at the
margin of financial inclusion.
Payment by cheque remains the system of choice
and convenience for a significant section of society and for a
notable range of transactions. We do not believe there are sufficient
viable alternatives available at this time and believe the phasing
out of cheques by 2018 would be ill advised.
February 2010
| 
