Media Centre
Press release
Check your cheques urge banks and building societies
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Date:
7 Dec 2005
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Banks and building societies have announced changes to the way they handle cheques that are payable just to a bank or building society, as a further measure to reduce cheque fraud. They are now embarking on a campaign, to ensure customers' money gets to the right account.
From next year, people will need to add further details, such as the name of the person whose account is to be credited, to the payee line of cheques that are payable to a bank or building society. However, the industry is advising that people start adding the extra details now, so that they benefit from greater protection immediately.
The announcement follows an agreement by banks and building societies that from October 2006, cheques for personal accounts made out solely to an institution, are likely to be declined in certain circumstances. From this date the name of the person who holds the account will also be required in the payee line. Cheques made out to personal or business customers will be unaffected. An example of how cheques should be made out is attached.
The industry worked closely with the Financial Services Authority on this initiative, which is an additional measure to beat the fraudsters and will now be working to ensure customers know what they need to do.
These revised procedures have been brought in to help protect customers against fraud but have always formed best practice and are highlighted within The Banking Code. There have been a few instances where a cheque intended for one account had been fraudulently deposited into another account. The reason this happened was that the cheque was made payable only to the institution involved, with no account name being quoted on the cheque. Including the name of the account to be credited as well as the name of the institution, will act as a "double check" as to which account the money is destined for.
Commenting on the changes, Adrian Coles, Director-General of the BSA said:
"It is important that the industry is vigilant about any new fraud. In this instance, it came to our attention that cheques which were written only to an institution, not a named account, had been used in a fraud. As a result banks and building societies are changing their procedures to help prevent it happening again. It is important that people get into the habit of adding extra details to their cheques now, rather than risk a cheque being declined from next October."
Commenting on the changes, Ian Mullen, Chief Executive of the British Bankers' Association said:
"The new arrangements reflect the importance that financial institutions place on fraud prevention. Although the instances where fraud has occurred in these particular circumstances are fortunately low, it is crucial that the industry continues to make life for the criminal as difficult as possible. The new measures are simple, but provide additional security when a cheque is made payable to an institution such as a bank or building society and follow good practice guidance that is included in the Banking Code."
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Contact for enquiries about the announcement:
Rachel Blackmore, Building Societies Association – (t) 020 7440 2218 / (m) 077 66 33 2164 / rachel.blackmore@bsa.org.uk
Brian Capon, British Bankers' Association – (t) 020 7216 8989 / (m) 07860 682215 / brian.capon@bba.org.uk
Contact for enquiries about cheque clearing: Sandra Quinn, APACS – (t) 020 7711 6234 / (m) 07768 044656 / sandra.quinn@apacs.org.uk
Notes to Editor:
1. From October 2006, cheques that are payable simply to a bank or building society and which are not being paid into the drawer's own account are likely to be refused by the bank or building society involved. The new arrangements will not affect payments being paid into the drawer's own account, or cheques used to pay a utility bill or credit card bill in the drawer's own name. Cheques payable to an individual or other business will not be affected. In 2004 there were over 2.1 billion cheques processed in the UK but only a small number are made out to financial institutions and will be affected by this change. Cheque fraud in the UK amounted to £46.2m in 2004 (up 2% on 2003).
2. The British Bankers' Association (BBA) is the principal trade association for banks operating in the UK. It has 218 member banks and many professional associate members. BBA member banks collectively employ over 400,000 staff in the UK.
3. The Building Societies Association (BSA) represents all 63 building societies in the United Kingdom. The building society sector employs over 45,000 full and part-time staff and operates through just under 2,100 branches.
4. Photographs of Adrian Coles are available from the BSA press office, or from the Association's website at www.bsa.org.uk or Headline Money www.headlinemoney.co.uk
5. Photographs of Ian Mullen are available from the BBA press office, or from the BBA website www.bba.org.uk
6. Copies of the BSA's leaflet A Guide to Writing Cheques can be found at www.bsa.org.uk and can be reproduced with the permission of the Association.
7. APACS publishes a booklet called Cheques & Cheque Clearing The Facts which provides an overall picture of how cheques work.
