MPs slam Payments Council over cheque abolition

23 Aug 11
The decision to abolish cheques was taken by an unaccountable, industry dominated body that does not act in the interests of consumers, MPs said today.
By Vivienne Russell | 24 August 2011


The decision to abolish cheques was taken by an unaccountable, industry‑dominated body that does not act in the interests of consumers, MPs said today.

Cheque

In a strongly worded report, the Commons Treasury select committee slammed the Payments Council’s 2009 decision to phase out cheques by 2018. This decision was taken without a cost‑benefit analysis, was poorly communicated and lacked the support of government, Parliament and the public, the MPs said.

Although the Payments Council last month abandoned its decision to scrap cheques, the MPs want to see the council’s powers be subject to greater checks and balances. Of its 15 voting board members, 11 are drawn from banking and the payments industry, while just four are independents.

Treasury committee chair Andrew Tyrie said: ‘The Payments Council is an industry‑dominated body with no effective public accountability.

‘It should not have unfettered power to take decisions on matters such as the future of cheques, or other issues that are of vital importance to millions of people. This is why we have recommended that the council be brought within the formal regulatory system.’

The MPs are also calling for greater consumer representation on the Payments Council board. In addition, any two of the four independent board members should be able to veto decisions, rather than all four as is currently the case.

The attempt to abolish cheques demonstrated a lack of transparency in retail banking, Tyrie said.

He added: ‘It is increasingly accepted that improving consumer choice will require more competition in the sector. The new [financial services watchdog the] Financial Conduct Authority should be given a primary duty to promote competition… Unfortunately, the government is resisting this.’

Gary Hocking, acting chief executive of the Payments Council, said the decision to retain cheques showed that the council listened to the concerns of consumers.

‘Consultation and transparency are at the heart of everything we do and the industry's commitment to keep cheques is a testament to this,’ he said.

On regulation, Hocking said: ‘Whilst we don't believe increased regulation is required, as part of an existing commitment to the Office of Fair Trading we are due to review our governance arrangements before the end of the year. We will take the select committee's recommendations, particularly on the role of our independent directors, into account.’

Spacer

CIPFA logo

PF Jobsite logo

Did you enjoy this article?

AddToAny

Top