The Treasury Select Committee (TSC) – a group of backbench
Members of Parliament which scrutinises the UK finance ministry,
the Bank of England and the Financial Services Authority
– is to reopen an inquiry into the proposed
phasing out of cheques in the country by 2018.
The TSC launched an inquiry in February 2010
on the future of cheques and took evidence from a range of
organisations, including the UK Payments Council.
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At that time the Committee was unconvinced by the Payment
Council’s argument that cheques were in “terminal decline” and
expressed concern about the rigour of the cost–benefit analysis
undertaken by the Council.
Commenting on this evidence TSC chairman Andrew Tyrie, said:
“The Payments Council had seemingly forgotten about the millions
of people who remain less at ease with the latest technology.
“Since our last inquiry we have been inundated by letters from
the public telling us that they rely on cheques.
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By GlobalData“Many charities, small business and vulnerable people –
including pensioners – depend on cheques. Their needs must be
considered. They should not be forced into shredding their cheque
books.
We will also want to examine whether it is in the public
interest that apparently competition, can and should, be set aside
on this.
“I was shocked, when the Payments Council last gave evidence, that
they had not conducted a rigorous cost benefit analysis. We asked
them to go away and do some number crunching. In this new inquiry
we can now examine their latest conclusions and work.”
The scrapping of cheques has been a longstanding ambition of the
UK Payments Council.
It reported that cheque use had collapsed with only around 4m
cheques written every day in 2009, down from 11m a day in 1990.
The Payments Council said cheques would only be scrapped
entirely if a suitable alternative was in place.
Ed Brindley, business development director,
Wincor Nixdorf, told RBI:
“Clearly it is right to further enquire into
the abolition of cheques:. However whilst use has in the main
largely disappeared at a consumer level, with some banks already
withdrawing support for cheques with a guarantee card, many small
businesses still rely on the cheque for payments: plumbers,
builders, charities, freelance and temporary workers are confident
in a guaranteed cheque for services rendered.
“What is important however is that by 2018, as
increasingly smart technologies are introduced into our everyday
lives, these same companies will be able to use a variety of
technological devices as alternatives to the cheque, utilising
handheld mobile, wireless or even biometric devices to capture
payments.”
The TSC’s initiative followed release of a
report from the consultants Forrester, ‘Next-Generation Digital
Financial Services.’
It reported that UK consumers continue to lag other major
European banking markets in the use of digital channels.
According to Forrester, 40% of UK banking
customers bank online at least once a month; 47% of customers visit
a branch at least once a month.
In the Netherlands 86% of customers regularly
bank online, closely followed by Sweden on 76%.
Online banking is now the primary channel in
Canada and the US, with 52% and 47% of customers regularly banking
on the internet.
In Germany, 44% of customers regularly bank
online. France (37%), Spain (18%) and Italy (17%) continue to trail
other major European banking markets.
