Banks to hasten their payment clearance systems: OFT |
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Wed, 25 May 2005 13:15
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The Office of Fair Trading (OFT) announced yesterday that banks would be speeding up the clearance of electronic payments, albeit with possible added costs.
Banks usually take three to four days to transfer money electronically, in standing orders, payment of bills through the internet or telephone banking deals. What’s quite interesting is that this so thought ‘cannot be helped’ delay helps banks bring home a whopping interest amount of £25 million in a year!
The OFT had announced that this delay would not be put up with any more and high street banks had to accelerate their transferring methods. Banks will be required to introduce a quick and efficient clearance service wherein all transactions are completed within 24 hours. Banking trade body APACS has been given a period of six months by the OFT to speed up their operations, which ought to be implemented after two years, by 2007.
Banks have, however, estimated that about £65m would be required to affect modifications in its payment methods and speed up electronic payments of standing orders, bill payments etc.
| Even though banks have agreed to bring about changes to its phone and internet banking areas, cheque clearances will take the usual time of three days as banks consider cheques as a ‘secondary issue’ and a “declining means of payment.”
Ever since former chairman of the London Stock Exchange, Don Cruickshank’s government-commissioned report raised the slow payment clearance issue in banks, about five years back, high street banks have been facing tremendous pressure to step up their payment operations.
Cruickshank’s report further prompted the OFT to set up the Payment Systems Task Force to initiate a probe into the matter. The task force comprised of representatives from banks, building societies, the Treasury, Bank of England, as well as known business and consumer groups.
Meanwhile, the proclamation by the OFT regarding the acceptance of banks to speed up their clearance systems has been appreciated well by consumer associations.
Senior policy adviser at consumer group Which?, Laurence Baxter, was quoted saying, “This agreement is a long delayed step forward. Finally the industry has promised to bring the UK’s electronic payments systems into the 21st century.” However, he stated it would be absolutely unfair on the part of banks to slam on charges for the new quickened service onto the customers.
In the same vein, Ed Mayo, chief executive of the National Consumer Council, commented, “These changes must be introduced as quickly and cheaply as possible. The two-year deadline for the banks to introduce next-day payments, once the implementation group has agreed the way forward, looks over-generous. And cheques must not become the Cinderella of the bank payments system. A donkey could deliver cheques faster than banks can put money into customers’ accounts.”
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