Written evidence submitted by the National
The National Pensioners Convention (NPC) did
not support the announcement made by the Board of the UK Payments
Council in December 2009, regarding the proposed phasing out of
cheques by October 2018. Not only was it clear that the Council
had not properly consulted with older people before making such
an announcement, but the way in which the issue was presented
raised a genuine concern amongst many pensioners as to their ability
in the future to manage their financial affairs in an easy and
In addition, by making such an announcement,
the Payments Council may have inadvertently precipitated the demise
of the cheque long before 2018, by giving companies and traders
a "green light" to stop accepting cheques as a valid
method of paymentas has already been the case in some supermarkets,
petrol stations and other retail outlets.
However, since the announcement, the NPC has
met with the Chief Executive of the Payments Council and started
discussions as to how the genuine voices of older people can be
properly consulted as to their financial needs over the next decade
and beyond. We hope that in future this will prevent a repeat
of the unhelpful way in which this issue was presented.
When considering how the abolition of cheques
may affect older consumers and what alternative methods of financial
transaction may be needed, it is important to set out some guiding
principles that any new system should adopt. These would include:
Maintenance of a signature based transaction
process that does not require the use of CHIP and PIN (which have
caused a series of problems for older people highlighted by the
introduction of the Post Office Card Account POCA).
Maintenance of a paper-based trail of
transactions, as is currently the case with cheque stubs, bank
statements and paying in books.
A simple to use system that enables individuals
to independently manage their own finances, via the postal service
Having a universally accepted and recognised
system in all retail outlets prior to 2018.
Maintenance of a system that allows third-party
authorisation of transactions such as those currently carried
out by carers.
For many individual pensioners, the loss of
cheques without a suitable alternative would severely inconvenience
them and damage their ability to manage their own financial affairs.
It might also raise serious concerns with regards to personal
safety, particularly if cash is seen as the alternative method
In recent years we have seen the emergence of
a number of problems associated with the dominance of online and
CHIP and PIN payment methods. These include:
Unfairness on those without access to
computer-based financial services and retailing. Despite many
claims as to the rise of the "silver surfer", seven
out of 10 older people have never been on the internet and lack
either the access or inclination to get online. This drive towards
computer banking and access to services has hugely disadvantaged
around 7 million older people, particularly when it comes to the
availability of discounts.
The use of CHIP and PIN (particularly
with the introduction of the POCA) has shown that many older people
have struggled with the challenge of remembering their numbers,
sometimes leading to Post Office clerks keeping a list of PIN
numbers for their regular clients and/or inputting the numbers
on the individual's behalf. This clearly raises serious safety
and data protection issues.
The Department for Work and Pensions
has been struggling over the last few years to find a suitable
alternative to giro-cheque based payments for those pensioners
who are without any form of bank or post office account. This
is particularly relevant for those who rely on a third-party carer
to assist them in managing their finances. In this respect, cheques
remain an essential method of payment, particularly when the individual
has a post office card account, but not a bank account, and the
carer is not always the same person. Despite the Payments Council's
hopeas yet it would appear there is not a suitable system
available that would meet this requirement.
Voluntary organisations and small charities,
like the National Pensioners Convention, would also be financially
disadvantaged if our affiliates and supporters were not able to
contribute to our activities in an easy way by post, rather than
online or by cash or credit card transaction. This would have
a serious impact on our civil society, the ability of voluntary
groups to perform their important roles and the opportunities
for voluntary work.
The NPC does not support the removal
of cheques unless and until a suitable alternative mechanism is
already in place, which meets the guiding principles outlined
in this submission.
Such a mechanism should be linked to
the establishment of a People's Bank at the Post Office, providing
much needed financial services to small businesses, local communities,
pensioners and others who have up till now been financially excluded.
This would not only provide much needed services, but also assist
in safeguarding the future development of the post office network.