Could Bank Ruling Mean Time Is Running Out For Cheques?
Solicitors may have to reassess their ways of making payments, following HSBC’s decision no longer to accept self-printed cheques from business banking customers in the UK.
The bank says its decision has been prompted by a rise in fraudulent cheque transactions linked to issues with the Image Clearing System (ICS) that was rolled out in 2018. Between January and July 2019, HSBC estimates such fraud cases cost it around £16m.
The ICS system allows banks to exchange digital images of cheques rather than manually process a paper version, with the aim being to reduce processing time.
The removal of self-printed cheques would mean that solicitors’ firms would need to pay cheques using HSBC printed cheque books or make alternative arrangements via online banking.
Commenting on the move, Andrew Fraser, Partner at genealogists and international probate researchers Fraser and Fraser, said:
“While we understand the clear need to combat banking fraud, HSBC’s decision has still come as a surprise, especially when the bank has advised us that alternative payment arrangements will need to be in place by 10 January 2020.
“As a business we currently send out around 2,000 cheques a year, often to older people for whom this is a tried and trusted method of payment and for whom making alternative arrangements can be challenging.”
“This move is likely to affect many firms across the sector and seems certain to add significantly to solicitors’ workloads. Our concern is that HSBC is using ongoing issues with the ICS system as an excuse to phase out cheques as a method of payment, when they are still vital for many people.”
In an email to Fraser & Fraser, HSBC pointed out that ICS is now used by every bank and building society in the UK. As a result of the system’s susceptibility to fraud, however, the bank says it has added security features to its own cheques to make them more secure. However, such measures do not apply to self-printed cheques.
This article was submitted to be published by Fraser and Fraser as part of their advertising agreement with Today’s Wills and Probate. The views expressed in this article are those of the submitter and not those of Today’s Wills and Probate.