Banks told to introduce faster payments service

Banks have been told to reduce clearing times on money transfers made via the telephone or Internet, the Office of Fair Trading (OFT) has announced.

The new clearing service will provide at least same day or next day clearance on money transfers and standing orders, depending on the time of day the payment is initiated.

Following consultation with the OFT, the Association of Payment Clearing Services (APACS) established an ‘implementation group’ to consider how the new service will work in practise. The group is due to report back to the OFT within six months and the banking industry will be expected to introduce the new service within two years.

Jonathan May, OFT Director of Markets and Policy Initiatives, said: “This is good news for bank customers, both personal and business. Telephone and Internet payments and standing orders should all be speeded up and the money could be available to the recipient on the same day.”

Paul Smee, APACS Chief Executive, described the decision as a “positive move”. He said: “The UK will have a faster payment service to rival the best in the world with the resilience and reach that are key to payments and in an environment where UK customers enjoy free banking if their accounts stay in credit.”

The National Consumer Council (NCC) has also welcomed the decision, but they also warned that it should be implemented as soon as possible. NCC Chief Executive Ed Mayo said: “It’s good that banks are finally doing the right things. The new system of same-day or next-day clearance for electronic payments by Internet and telephone is very welcome.

“These changes must be introduced as quickly – and cheaply – as possible. The two-year deadline for the banks to introduce next-day payments looks over-generous.”

The OFT is expected to begin investigating cheque clearance. The NCC warned that cheques must not become “the Cinderella of the bank payments system.” Mr Mayo said: “A donkey could deliver cheques faster than banks can put money into customers’ accounts.

“There are still 6.5 million cheques issued every working day, so the system needs to work speedily for everyone – whether they use cheques or electronic payments.”

(KMcA/SP)