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The end of Cheques? - Treasury Contents


Written evidence submitted by the National Pensioners Convention

INTRODUCTION

  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 convenient way.

  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 payment—as 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.

GUIDING PRINCIPLES

  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 if necessary.

    — 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.

IMPACT OF CHEQUE ABOLITION

  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 of payment.

  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 hope—as 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.

SUMMARY

    — 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.

March 2010





 
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