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Withdrawal of UK Cheque Guarantee Card Scheme 30th June 2011

If your business currently receives or makes payments by cheque supported by a guarantee card, please read the following information about the industry-wide withdrawal of the UK Cheque Guarantee Scheme.

In September 2009 the UK Cheque Card Management Committee announced the closure of the UK Cheque Guarantee Card Scheme. In line with that announcement the last date on which you will be able to accept a cheque relying on the guarantee is 30th June 2011.

As a collector of cheques it is vital that you familiarise yourself with the details surrounding the closure of the scheme and make important decisions regarding your payment acceptance methods.

The bullets below summarise the key points:

  • Up until 30th June 2011 the scheme will continue to operate completely to its current terms and the conditions of card use
  • No new cards containing the cheque guarantee logo or William Shakespeare hologram will be issued to bank customers after the scheme closure date. Although there may still be some cards with the logo in circulation for up to 2 years after the scheme closes, you may not count on the guarantee after 30th June 2011.
  • Cheques issued and dated on or before 30th June 2011 and correctly supported by a cheque guarantee card will be paid in line with the respective Conditions of Use
  • It will still be possible to accept cheques in payment after 30th June 2011 but you will not be able rely upon the guarantee to protect the payment even if there is a cheque guarantee logo present on the card used by the issuer.
  • It is always important that cheques for payment are deposited into your account immediately after you receive them. However, it is vital to ensure the support of the Cheque Guarantee Scheme that cheques issued before 30th June 2011 are deposited into your account without undue delay.

Questions & answers for acceptors of cheques

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.

When will the UK Cheque Guarantee Card Scheme close?

The last day that you will be able to accept a cheque relying on the guarantee will be 30th June 2011.

Do I have to take any action now?

You might decide to make no immediate changes to your business. However, in the light of the announcement, you may wish to begin investigating alternative payment methods.

What are the alternatives to accepting guaranteed cheques?

  • If you don’t already, you may decide to start accepting debit card payments.
  • You may decide to take cash.
  • You might wish to explore direct payment methods, made by your customer online or through telephone banking channels.
  • You may choose to accept cheques without guarantee. UK clearing regulations mean that you have certainty of funds after the sixth working day following the day you pay the cheques into your bank.

Can I still accept cheques after 30th June 2011?

Yes, absolutely, but without the guarantee facility.

How will I know which bank has withdrawn the guarantee?

You will not need to know which bank has withdrawn the facility. All banks and building societies have agreed that the scheme will cease on 30th June 2011. After that date you cannot count on the guarantee if you accept a cheque from your customers. Before that date, if a customer offers you a card in guarantee you should ensure that the hologram and logo are present and that the cheque is within the limit specified. If you follow this guideline, then the cheque is guaranteed in line with the scheme rules.

How long will I have to pay in any guaranteed cheques that I take?

All cheques should be paid in to your accounts as soon as possible after receipt.

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 assurance that sufficient alternatives are widely available to all customers.

Where can I get more information?

For more information please visit www.ukpayments.org.uk.