The central clearing cycle in England and Wales takes 3 working days. From 30th October 2017, certain banks and building societies are introducing a new digital cheque image clearing cycle which takes 2 working days. All other banks, including The Co-operative Bank, will introduce this cheque clearing cycle throughout 2018. The details below are for the central clearing cycle.
As part of the cheque clearing process we aim to provide clarity on:
- when you will start to earn interest on a cheque deposit;
- when you can withdraw against the cheque deposit, and;
- when a cheque can no longer be debited from your account without your permission (cheque clearance in this instance is known as ‘certainty of fate’).
The maximum cheque processing timescales are as follows:
|T = Transaction day||The day a cheque deposit will appear as a credit on your account.|
|T + 2 = Transaction day plus 2 clearing days||The day you will start to earn interest on a cheque deposit. Or, the day the value of the cheque deposit will start to reduce the interest charged on your overdraft.|
|T + 4 = Transaction day plus 4 clearing days||The day you can withdraw against the cheque deposit in your current account.
Until ‘certainty of fate' is reached a cheque can still be returned unpaid and the deposit removed from your account.
|T + 6 = Transaction day plus 6 clearing days||The day you can withdraw against the cheque deposit in your savings/ deposit account.|
|T + 6 = Transaction day plus 6 clearing days||The day the cheque deposit receives ‘certainty of fate' and can no longer be debited from your account without your permission.|
|Cheques deposited after 4:30 will be subject to one day's delay.
Cheques paid in at the Post Office will normally be credited on the next working day. Cheques may take a further working day to be credited to your account if your transaction takes place after the cheque processing cut-off time at the Post Office you have used.
For postal deposits, T is the day the cheque is received by the financial institution and credited to the account.
Please note: Clearing days are equivalent to business working days and do not include weekends or bank holidays example – if T is Monday then T+2 is Wednesday or, if T is Friday then T+2 is Tuesday. There may be limited circumstances beyond our control, where payment or non payment of a credited cheque may be delayed or not presented. For example – if the cheque is involved in a fraudulent situation.
What this means to you
We would like to specifically draw your attention to the following points:
- From ‘certainty of fate’ you are assured that the value of a cheque deposited on your account is yours.
Should you wish to place a stop on a cheque you have issued, you have up until the day before the cheque is presented to us.
|Day||Working day||Customer Promise||Example|
|Sunday||Mr Cook sold his car for £2,000 and was paid by cheque.|
|Monday||Day 1||T||At lunchtime, Mr Cook went to the bank and paid in the £2,000 cheque, which showed as a credit in his account.|
|Wednesday||Day 3||T+2||Mr Cook starts to earn interest on the £2,000.|
|Friday||Day 5||T+4||Mr Cook withdraws £100 of the £2,000, leaving £1,900 in his account. He could withdraw all of the money but he chooses to wait until after T+6 when he has greater certainty.|
|Tuesday||Day 7||T+6||At the end of the day, Mr Cook has £1,900 in his account. He can now be sure that the money will not be returned unpaid.|
|Wednesday||Day 8||Mr Cook withdraws £1,900 and uses the money as a deposit for a new car.|
|Note: If Mr Cook was found to be a knowing party to fraud, then the original cheque deposit of £2,000 can be taken from him at any point.|
New Digital Cheque Image Clearing Cycle
Where a cheque you have issued is paid in at a bank or building society that has introduced the new digital cheque image clearing cycle, your account will be debited (assuming you have sufficient funds in the account) by 23:59 on the following business day.
If you have an agreement to deposit cheques at another bank or building society and they have introduced the new digital cheque image clearing cycle, the funds (assuming the cheque can be honoured) will be credited to your account by 23:59 on the following business day. You will be able to withdraw the deposited funds as soon as they have been credited to your account. Likewise, interest will be earned (as applicable to your account) once the funds have been credited.