Ask the FT: Citibank apologises for cheque shambles

This bit should be irrelevant, direct debit means the drawer takes how much they want, the bank doesn't pay them a set figure like a standing order. In this case the figure probably relates to a notional maximum amount the drawer could take - perhaps in normal use this could be set per item to a useful amount like £250.

In message , Sufaud writes

This cant be correct. Are you sure it didnt say 'refer to drawer'?

Cheques that get 'stopped' like this dont get returned with an answer' refer (return) to drawer'. Something doesnt ring true here.

How do they get returned, then?

It's entirely possible that there has been a misunderstanding and that the call centre person thought that the customer was ordering a *replacement* cheque book because his existing one had been lost. This should not, of course, have been possible, since the bank should have made clear to the customer that "if it turns up again, don't use any of the cheques". Such a warning would at the very least have prevented the misunderstanding: "No, no, I haven't lost it, I'm just running low."

In message , Ronald Raygun writes

"Payment countermanded by order of drawer, written confirmation required"

"Cheque book reported lost"

'Refer to drawer' is a libellous answer if there WERE sufficient cleared funds available in the drawee's account at the moment of presentation.

Then what happens? Is the payee expected to seek said confirmation, or will the drawee? Surely a cheque, unless forged, *must* be paid or else the drawer will be sued and (if appropriate) prosecuted for fraud. It's odd that banks even permit folk to stop cheques for any reason other than theft or loss. In particular, I'm intrigued that in the leaflet RBS send me now and then, sumamrising all their charges for various things, that they show the fee for stopping a cheque as NIL if lost or stolen, but £15 (or whatever, I forget the actual amount) for any other reason. Surely there should be no other lawful reason, and by charging a fee for it, are they not in effect offering themselves as an accessory to whatever shifty stuff the customer is up to?

Tsk.

Hmm. It shouldn't be, other than that by tradition it has become a euphemism for "insufficient funds". So why don't they say *that*?

Logically "written confirmation required" (unless the drawee themselves will seek it) is synonymous with "refer to drawer" because it invites the payee to refer the matter to the drawer. It's bloody double-speak.

I'm really quite a traditionalist myself, but there are limits. You old-timers have a lot to answer for...

In message , Ronald Raygun writes

Yes, it means their just waiting for the drawer's written confirmation to arrive and is used to accommodate telephone instructions.

No, why? On presentation on demand it must be 'paid' or 'unpaid'.

Thetas the drawer's problem, not the drawee's

Yes.

The reason for stopping the cheque is not the drawee's problem. If the drawer countermands their order, then so be it. The drawee's relationship is with the drawer, although he does have responsibilities to the other parties to the cheque.

Yes, this seems good practice by them. It stops the problem of customers being reluctant to countermand genuinely lost cheques and saves hours and hours of work later trying to find paid cheques that drawers ask to be retrieved. It also deters the awkward buggers who just like stopping cheques for kicks.

The bank must not judge the client :-)

Flack v London & SW Bank Ltd agrees with you. But it was 89 years ago and was superseded (see below)

And Jayson v Midland Bank agrees with that, but as it is more recent (1968) it carries more weight. An Irish case was more explicit in 1950. Irish precedent based on similar statutes carries no obligation but can be persuasive in UK.

Agreed, but who wants to jump off the cliff first?

Yes, but a double speak that was established by case law way before Mr Orwell used the term. Banks would love to tell the clear truth so long as they dot get sued.

Smethers, could you pass me my smoking jacket please.................................

So basically it means "we'll get back to you". Is this totally open-ended, or is there a ceiling on how long one is expected to hold one's breath?

I meant in the wider context.

Indeed, I didn't mean to imply otherwise.

I'd say it goes (or should go) further. If it is naughty for a drawer fraudulently or frivolously to stop a cheque, then the drawee, by acting on those instructions, is party to the naughtiness, and is an accomplice. Therefore the reason for stopping the cheque which the drawer intimates to the drawee must be such that the drawee can exculpate themselves.

But on the other hand, by taking a fee for a potentially unlawful act, and none for a clearly innocent act, they are really landing themselves in it, since there can be little excuse that they are unaware of the fact the drawer is up to something dodgy and they're helping him.

They should really always refuse.

What cliff? If it has been held by a court to be synonymous, then why don't they do away with the euphemism and just call a spade a spade?

In message , Ronald Raygun writes

No, it puts the onus back in the court of the payee who must then decide whether to present the cheque for payment again.

It certainly doesnt go that far.

No. By definition, a cheque is an unconditional order, which is either authorise or countermanded. Anyway, the drawee would only ever be able to rely on the drawer's word as to the reason for the countermanded order.

It would be interesting to see that in practice.

In case they made a mistake and there was sufficient dosh.

No, it's more than a mere instruction to the keeper of one's purse which is capable of being countermanded. Cheque law makes it a "sin" to countermand it because the payee is entitled to believe that it will be honoured come what may. Not always without difficulty, of course, i.e. he may have to sue, but will get the dosh in due course or bankrupt the drawer in the process (if he isn't already).

True enough. But by the drawer agreeing to pay the fee, and thereby admitting that the reason is *not* theft or loss (or as good as theft, e.g. having been forced to sign by some form of threat), the drawee now pretty well knows the cheque is being stopped illegally, and by even offering that option is in effect encouraging the drawer to act unlawfully.

Not *necessarily* criminal. Quite possibly so. If the cheque was originally drawn fraudulently with the intention of stopping it, then offering the facility to stop it is in effect being an accomplice to the fraud.

Nonsense, that makes no difference. If "refer to drawer" is deemed equally as libellous as "insufficient funds", as you have indicated, when there are in fact sufficient funds, then they might as well say the latter.

In message , Ronald Raygun writes

I can accept the word 'sin' but not the words 'cheque law'. The latter could be replaced by 'good practice'.

No, there is NO illegality in stopping a cheque whatsoever. If the cheque was issued to pay for goods that were faulty, the payee *could* sue, but the drawers counterclaim would win the day. Note the word 'counterclaim' not 'defence'.

I have not answered the rest because I think this point covers it.

No, "law" was deliberate, since the payee can always sue on the cheque and should always win irrespective of the nature of any underlying transaction which may have created liability for payment.

It probably does. It *is* illegal to stop a cheque because there is, as you admit, no valid defence to doing so, and, as you say, only a counterclaim can save the culprit. The only proper way for a wronged purchaser to seek redress is to to sue the seller *instead of* stopping the cheque (and after exhausting other channels of trying to negotiate a settlement).

To short-circuit the process by stopping the cheque is essentially a bully-boy tactic to attempt to put the drawer/purchaser in a stronger bargaining position by forcing the payee/seller to sue. That's basically a case of taking the law into one's own hands and is tantamount to theft.

Incidentally, one stupid thing that Citibank does is they keep track of unused cheque numbers. If the total reaches about 10, they stop the automated sending out of new cheque books. But they don't tell you. You just don't get a cheque book when you get to the relevant point in the old book. So you request a cheque book manually, by returning the slip. It doesn't arrive. You request it again, via their online banking message feature. It still doesn't arrive. All the time they remain silent. Only when you phone them; a last resort because it takes ages to get through, will somebody admit this is the reason.

It is easy for somebody to spoil 10 cheques over say 5 years, as I did, and get all this hassle.

A total bunch of wankers.

In message , Ronald Raygun writes

What law says that then?

Contravening a legal precedent is not an illegal act. S75 Bills of Exchange Act specifically details that a countermand of payment is a specific instruction upon which a banker must act.

Nice convoluted theory

How should I know? You're the expert, I thought. The one which makes it possible to sue on a cheque regardless of whether it represents settlement of a debt. Suing is a process of righting a wrong. Ergo stopping a cheque is a wrong.

Not me!!

You are confusing a 'law' (which defines legality) with the precedents in equity in which an argument is decided by a judge. Judges decisions (subject to the circumstances and the status of the court) are often regarded as a precedent, but a persons actions which contravene a previous precedent are not *illegal*.

I think you're confusing law with statute.

"wrong" is not the same as "illegal". The latter usually refers to something which contravenes criminal law, and hence which you could be fined or imprisoned for. Civil law allows the enforcement of debts, but I think describing the creation of a debt as "illegal" is sloppy use of language.

It is in this context, though.

Usually, yes.

I wouldn't go so far as to call it sloppy, merely stretching a point.

I think creating a debt without agreement of the other party is very much illegal, even in the strict sense of the word.

I take your point, but perhaps you could define 'illegal'?