Written evidence submitted by J R Rook
I understand that your Committee is to consider
the phasing out of cheques in favour of an alternative payment
system and I thought you might allow me to make some points as
an individual bank customer. I appreciate that cheques are likely
to be an expensive system but in proposing an alternative it is
up to the banks to ensure that the system is fair to customers
and easy for all to use.
1. There must be a way in which the customer
can prove that the bank is wrong. At present, this is fairly simple.
The bank has to retain the cheques, or in practice, copies. If
the cheque differs from the amount debited, or the signature is
not correct or if it has been credited to the wrong account then
that is the bank's problem to sort out. It may be thought that
this is a rare situation but I have had to ask my bank to correct
matters twice in the last three years.
2. The bank should never be able to use any
argument along the lines that the "technology is infallible".
This argument, or a similar one, is always their first line of
defence and the customer has no real defence. I do appreciate
the problem for the banks. If they do not adopt this view then
anyone can go along, say the bank is wrong and claim a refund.
On the other hand, it seems that the banks want to phase out cheques.
It is up to them to provide an alternative system which enables
them and the customer to prove each other wrong; as the present
cheque system does. The banks say something along the lines, "we
are always sympathetic" but they are not if it involves paying
money out! To see their reluctance it is only necessary to read
the correspondence of customers to the press.
3. A cheque paid to an organisation is legally
also a receipt. What is going to be the new legal receipt or are
firms now going to revert to always issuing free receipts? I have
had this problem also. I paid a cheque to an insurance company
which then alleged it had not been paid and would not wait to
sort out the problem. Eventually a copy of the cheque paid into
their account proved them wrong.
4. In connection with (4) and the matter of
legal receipts. There are now a number of alternative payment
systems which the banks might think of, the Post Office or Paypoint
for example. I can see that these might be used but the status
of a payment needs to be clearer than it is at present. These
organisations do issue receipts. However, this only means that,
say the PO has received the payment and not the final organisation.
The system should be clarified so that the customer is never involved
in a battle between the receiver and the final organisation. Nor
affected by possible bankruptcy. (The other issue is that Paypoint
only takes cash, mostly.) In short a receipt by the payment taker
should be the same as a receipt by the final organisation.
5. The system needs to work for individuals
and tiny organisations. A cheque in the post is easily done as
post boxes are everywhere but banks and Post Offices are becoming
more difficult to reach.
6. The system should not require PINS. I cannot
remember PINS unless I write them down and that then means I would
always be at fault! There are chip and signature cards and I do
have one. However in general, credit card issuers and other banks
have not been willing to issue them. I do feel uneasy about my
debit card because the bank does not allow me to restrict the
amount of withdrawal. It finds no trouble in restricting the amount
of cash withdrawl nor in restricting the amount available on credit
cards! I suspect that maybe because the bank is at risk in those
cases! In summary here I feel that the rules for cards are more
to protect the banks than to protect me.
7. I see that telephone banking might be acceptable
but at the moment, I cannot prove the bank wrong! Additionally
I need a PIN and the bank charges a premium rate (0844, it did
change it when it 0845 became like a local number!) and spins
out the call by giving endless information.
8. The internet will be raised by the banks.
However this is expensive; the purchase and maintenance of the
computer, security systems, cost of broadband connection and so
on. Also I simply do not believe these systems are secure and
I worked with computers for many years!
To summarise I would say that any new system
should have the following:
1. Clear way for the customer to prove the bank
2. Clear legal receipt system.
3. Works without PINS if the customer wishes.
4. Works by using the post.
5. Banks responsible for fraud.
6. Telephone and internet not required.