Why has the decision been taken to close the scheme?
The use of guaranteed cheques within the UK has been in rapid decline for several years. The Payments Council, which is the strategic body governing payments in the UK, decided that it would be better to actively manage the closure of the scheme rather than allow the confusion that would follow if individual banks chose to withdraw the service. The Payments Council invited advice from key consumer groups such as Which?, Help The Aged and Consumer Focus. The Payments Council also consulted with the leading acceptors of cheques including The Federation of Small Businesses, The British Retail Consortium, The Forum of Private Business and the British Cheque Cashers Association. After considering these views, the Council asked banks and building societies to establish a workable process for closing the scheme and the date was chosen and announced in September 2009.
When will the UK Cheque Guarantee Card Scheme close?
The last day that you will be able to write and guarantee a cheque will be 30th June 2011.
What does this mean for cheques after 30th June 2011?
This announcement and the scheme closure do not mean the end of cheques. After 30th June 2011, you will still be able to issue cheques and businesses will continue to accept them, but without the guarantee. In fact, in most situations, research shows that the guarantee is not an essential part of the transaction and is carried out through habit. You could find that the acceptor will continue to accept your cheques even without the guarantee.
What can I use instead of a guaranteed cheque?
In the vast majority of cases, your debit card. The majority of businesses and shops accept debit card transactions. In other situations you will be able to provide a cheque without guarantee, pay by cash or make an online or telephone banking transfer.
Will I get a new card?
All banks and building societies are withdrawing the guarantee from the same date (30th June 2011). The presence of a William Shakespeare hologram and logo will cease to be relevant following that date. Each bank has had to make decisions on card issuing based on their own situation and customer engagement plans. Some have removed the service already and others are doing so on renewal of cards. At CFS we took the decision to begin removing the hologram and logo from our cards as we issued new or replacement cards from summer 2010. Whether a customer has a card with or without a logo, they will not be able to guarantee a cheque after the scheme closure date.
Can I still use cheques after 30th June 2011?
Yes, absolutely, but without the guarantee facility.
Who will accept cheques after 30th June 2011?
Very little will change. The vast majority of high street retailers and supermarkets stopped accepting cheques some time ago. As now, it is entirely up to any business what form of payment they are prepared to take from customers. Cheques are traditionally used for a wide variety of payments on which the guarantee has never been relevant due to the relationship between the parties involved. E.g. person to person, bill payments, regular payments where you are known to the payee. There is no reason that these practices cannot continue, although it is a matter for agreement between the cheque issuer and the acceptor.
Does this mean that the end of the cheque is now more likely?
The long term future of cheques is currently subject to separate review at Payments Council. Comprehensive consultation has been carried out with key stakeholders and cheque users. Whilst the closure of UK Cheque and Credit Clearing has been proposed for the end of 2018, no decision has been made on the future of the cheque. When any decision is made it will be well publicised and will include assurances that sufficient alternatives are widely available to all customers.