On Tuesday, the charity sector celebrated an announcement from the
Payments Council that it was abandoning it target of abolishing cheques by 2018.
I think there’s a possibility that the sector may be
cheering an own goal.
This is partly because it’s cheering the end of something
that was never going to happen. The Payments Council never said that cheques
would be abolished. Cheques are a statutory instrument, and can’t be abolished
by the Payments Council. It would need primary legislation.
The Payments Council said the central clearing system would
be abolished.
This is the system which allows you to cash a cheque for
free. It’s an expensive system, and at present, the cost is borne by the banks.
However the banks have absolutely no obligation to continue
to pay for this system – none whatsoever. So come tomorrow, there’s actually
nothing to stop the banks refusing to accept cheques, or charging you every
time you write one. When it gets too expensive to manage cheques, that’s
exactly what they’ll do.
The Payments Council had promised that before it scrapped
the clearing system, it would introduce an acceptable alternative for everyone
in the UK.
Having spoken to them about one of these alternatives
it didn’t sound that bad. In fact it sounded like it might even be an
improvement.
The decision to scrap cheques, though, is back in the hands
of the banks, not the Payments Council. There’s no longer a promise that there
will be an alternative system in place. And we have no idea when it will
happen.
Of course, it may just be that cheques will just fade away,
and there will be no need to manage their withdrawal. Maybe they’ll go the way
of the telegram and the steam locomotive, quietly and without the need for any
replacement at all.
But it may be, equally, that banks will scrap cheques long
before there are alternatives. Given the track record of Britain’s banks in
looking after the vulnerable, the elderly, and the needy, I don’t think it’s
terribly likely they will consider their needs in depth when they take this
decision. It will be all about the bottom line.
I could easily see it happening before 2018, and it could
well be the case, when it happens, that charities and their donors have no
alternative at all.
I’m not sure the Payments Council was right – far from it –
and I don’t think it explained itself very well to anyone throughout this
debate.
But I’m not sure at all that the situation we’re in today is
an improvement on the one we had last week.