Lloyds TSB decides to offer instant interest on cheques |
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Published
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Wed, 26 Apr 2006 12:05
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LONDON - Lloyds TSB has announced that it will now start paying out interest on cheques from the day they are deposited rather than wait for their clearance, which usually takes three days. The bank claimed that it was the first in the UK to take such a step and that it was only responding to complaints from customers who think that banks take a long time to clear cheques.
However, Lloyds is not handing out instant cash on the cheques. “We have talked to our customers and tried to look at where the pinch points are in customer satisfaction and this issue keeps coming out,” said Terri Dial, Lloyds executive director of UK retail banking. The bank said that by introducing this initiative, it was prepared to risk bounced cheques, which happened only in a very few cases each year.
Lloyds TSB is one of the four big clearing banks in Britain and said that with this new initiative customers will gain 150 days’ extra interest a year. Last year, the bank's customers deposited 55 million cheques, worth £32 billion. The bank is also said to be planning to disburse immediate interest on cheques valued above £1,000.
The Office of Fair Trading is enquiring into how the cheque-clearing process could be speeded up and will release its report this summer. Lloyds TSB’s move also comes in the backdrop of Mervyn King's observations that the late clearance of cheques was hurting customers. The Governor of the Bank of England had said last year that the slow movement of money was hitting Britain, as it was perceived as uncompetitive as compared to other European countries.
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