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Right to obtain a copy of digitally-processed cheques to be introduced into UK law

A new right for businesses and consumers who make payments by cheque to obtain a free copy of that cheque from their bank is set to be introduced into UK law.06 Nov 2017

The government is consulting on proposals which would see it set out new legislation to allow payers to request a copy of the cheques processed via the new image clearing system (ICS) for cheques, which recently came into operation. It said that the copy, together with "additional information", could be used by payers to provide evidence of their payment.

The ICS offers 'next weekday' clearance of cheque payments through the processing of digital images of paper cheques.

"Under the new ICS, the payer’s bank will no longer receive the original cheque from the payee’s bank; instead, the payer’s bank will receive a digital image of the cheque from the payee’s bank," the Treasury said. "To allow payers of cheques to continue to receive evidence of payment under ICS, the primary legislation allows the Treasury to require that a copy of the paid cheque be provided to the payer by their banker, if requested."

Under the plans, banks would need to provide additional information such as details of the date and time at which the payment instruction was made and submitted to the ICS payment system, the value of debit, identifiers of debit from the ICS and collecting bank, sort code and account number details of the payer and payee and confirmation that the payment was processed and information requirements met from the ICS.

The Treasury said that it also plans to introduce further regulations which would entitle payers to claim compensation should they "left out of pocket as a result of a loss incurred in connection with the presentment of a cheque under the new ICS".

The Treasury said: "Under the existing clearing system, the paying bank typically compensates customers for a loss, though there is no legislation stipulating that they must do so. Rules for compensation in cases of fraud or error (‘adjustments’) are also set out by Cheque and Credit Clearing Company."

"[The] government believes that this industry-led approach works well, but is concerned that the new system could introduce the risk that a payer of a cheque who incurs a loss may not be compensated. This is partly because under ICS the payer’s bank will no longer receive the original cheque. [The] government therefore believes that legislation is necessary to protect the customer," it said.

The Treasury's consultation on its plans is open until 1 December.