There was a piece on R4's MoneyBox at the weekend which struck me as very significant -- did anyone else catch it? It appears that, under some circumstances which remain unspecified, banks can "unclear" a cleared cheque and remove funds from the payee's account; this can happen even if it makes the payee overdrawn as a result, and at any time -- months, even -- after the date the payment was "cleared". And it's all done without even notifying the payee!
The piece was rather under-researched, and I hope they follow it up this coming weekend. The online article is at:
Hi I heard about this a little while ago but didn't take in the details. then last week I sold a car on EBAY to "Lewis Williams" in Edinburgh who had that day joined EBAY. he was an importer and a client of his owed him 6K he suggested that his client make the cheque out to me and I would forward on the balance through western union (Translates as untraceable after the funds have gone) Also Lewis Williams didn't seem to have a great grasp of the english language and IMHO didn't sound the way someone called Lewis Williams should.
Be very careful if I didn't know about this I would have forwarded on the balance and the 6K would also have left my account!
That sounds to me more like a straightforward case of a dodgy cheque which was unlikely to clear in the first place.
I've just had an e-mail from the senior producer of MoneyBox saying that they're definitely going to return to the topic in this Saturday's programme. (I'd e-mailed a list of questions raised by the piece last week which were left unanswered at the time.)
If its important, the cheque should be specially cleared - and your own bank should be asked to find out for you if the cheque is cleared or not. Once you have been told the cheque is cleared it will be
*very* hard (perhaps impossible) for the other Bank to get out of it at a later date, especially if by then you have spent the money.
I can think of several reasons why a Bank might bounce a cheque that was not specially cleared, days weeks or months after you banked it.
The cheque could be delayed or lost in transit - stuck in some machine or under a desk at a Bank's clearing department, lost or stolen in a bag of mail (they use securicor or similar to move them and we all know how easily they lose things - even prisoners!). Nobody might ever know about it until the cheque turned up (unless the other guy noticed and reported it). Or it could take the Bank months to sort out the mess, in the case of a bag of lost or stolen cheques.
It could have been be taken from the wrong customer's account, the mistake not being discovered until someone complained about it months later. If the correct customer didn't have enough money by then, or the signature was forged, or the cheque was stopped, or the customer was bankrupt or died... and so on and so on - the cheque could bounce.
Things have always been this way. But - and this is important - if the cheque is specially cleared and you get specifically told it has cleared, you should be safe as your own Bank would keep a written record of the special clearance and what you were told. That statement by APACS seems pretty stupid, if they were quoted correctly.
Do the banks make a charge for "special clearance" ?
If not, and if as a result of the current media coverage many, many more people start asking for special clearance on all their cheques - then I imagine the banks would need to quickly introduce charges for this service ...
Yes, usually they do charge for it. Unfortunately, they also charge for most alternative methods such as Bankers Drafts or one-off electronic payments. It tends to be a fixed charge, so special clearance etc. is most useful for really big transactions where the charge will be a small percentage of the total cost.
The fixed charge stops the Banks getting flooded with requests for special clearances on small cheques and for them, of course, the cheque guarantee system works quite well.
I agree with the above except for one thing, which is one of the main points of confusion when this topic appears in this group, that is the misuse of the word 'cleared'.
When asking the drawee for fate of the cheque, dont ask if it has 'cleared', ask if it is 'paid'. Only when the drawee says it is 'paid' (and for a crossed cheque they will only tell another bank this) is it irrevocably 'paid'. The word 'cleared' has no such significance.
Yes. But the actual description is 'direct (or special) presentation (or remittance)'. All that happens is that the payee gets to know the fate of the cheque quicker, and absolutely, it doesnt 'clear' the cheque any quicker at all.
Aaah yes, the old hornets nest of "cleared for fate" (paid), and "cleared for value" (interest). I kind of agree with your suggestion but I think confusion will continue unless and until the banks sort out the names.
Most customers will find it hard to remember to ask if a cheque is "paid" when their bank has sent it for "special clearance". The name itself is an invitation to ask if it's cleared. To be unambiguous, customers should ask if its "cleared for fate" but as it's human nature to shorten such names, the names should be changed to protect the innocent! ;)
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