Cheque and Credit Clearing Company
Encyclopedia
The Cheque and Credit Clearing Company Limited is a membership-based industry body with 12 settlement members. The company has managed the cheque
clearing system in England and Wales since 1985, and in all of Great Britain since 1996 when it took over responsibility for managing the Scottish cheque clearing as well.
As well as clearing cheques, the system processes the following forms of payment: banker's draft
s, building society
cheques, postal order
s, warrants, government payable orders and traveler's cheque
s. The company also manages the systems for the clearing of paper bank giro
credits (the credit clearing) and euro cheques (the euro clearing).
The clearing system in Northern Ireland is operated by the Northern Ireland Bankers’ Clearing Company.
Members of the Cheque and Credit Clearing Company are individually responsible for processing cheques drawn by, or credited to, the accounts of their customers. In addition, several hundred other institutions provide cheque facilities for their customers and obtain indirect access to the cheque clearing mechanisms by means of commercially negotiated agency arrangements with one of the full members.
The Cheque and Credit Clearing Company members, known as clearing banks are:—
In 2009 three and a half million cheques and three hundred thousand paper credits passed through the British interbank clearing system each working day. Cheque volumes reached a peak in 1990 when 4 billion cheques were written but usage has fallen since then. This is mainly due to alternative methods of payment such as Direct Debits
, Bacs payments
and more recently, the Faster Payments Service
, being used more widely by both individuals and businesses. The annual rate of decline of the volume of cheques being used is now in double figures.
The 2-4-6 changes set a maximum time limit of two, four and six working days for each of the stages after paying in a cheque to a current or basic bank account. The timescales cover cheques, bankers' drafts, bankers' cheques and building society cheques paid in to sterling current and basic bank accounts. For deposit or savings accounts the maximum time limit for withdrawal is longer (6 days, rather than 4).
For the first time, after paying in a cheque, customers can be sure that at the end of six working days, the money is theirs. They are protected from any loss if the cheque subsequently bounces, unless they are a knowing party to a fraud. The timescales also set maximum times when customers start earning interest on money paid in (2 days) and when it will be available for withdrawal.
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
clearing system in England and Wales since 1985, and in all of Great Britain since 1996 when it took over responsibility for managing the Scottish cheque clearing as well.
As well as clearing cheques, the system processes the following forms of payment: banker's draft
Banker's draft
A banker's draft is a cheque where the funds are taken directly from the financial institution rather than the individual drawer's account....
s, building society
Building society
A building society is a financial institution owned by its members as a mutual organization. Building societies offer banking and related financial services, especially mortgage lending. These institutions are found in the United Kingdom and several other countries.The term "building society"...
cheques, postal order
Postal Order
In the United Kingdom , a Postal Order is used for sending money through the mail. In the United States, this is known as a Postal money order...
s, warrants, government payable orders and traveler's cheque
Traveler's cheque
A traveler's cheque is a preprinted, fixed-amount cheque designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for that privilege.- Usage :As traveler's cheques can usually be replaced if lost or stolen A traveler's cheque...
s. The company also manages the systems for the clearing of paper bank giro
Giro
A Giro or giro transfer is a payment transfer from one bank account to another bank account and instigated by the payer, not the payee...
credits (the credit clearing) and euro cheques (the euro clearing).
The clearing system in Northern Ireland is operated by the Northern Ireland Bankers’ Clearing Company.
Members of the Cheque and Credit Clearing Company are individually responsible for processing cheques drawn by, or credited to, the accounts of their customers. In addition, several hundred other institutions provide cheque facilities for their customers and obtain indirect access to the cheque clearing mechanisms by means of commercially negotiated agency arrangements with one of the full members.
The Cheque and Credit Clearing Company members, known as clearing banks are:—
- SantanderGrupo SantanderThe Santander Group is a banking group centered on Banco Santander, S.A., the largest bank in the Eurozone and one of the largest banks in the world in terms of market capitalisation. According to Forbes Magazine Global 2000, it is the 13th largest public company in the world...
- Alliance & Leicester Commercial Bank
- The Governor and Company of the Bank of EnglandBank of EnglandThe Bank of England is the central bank of the United Kingdom and the model on which most modern central banks have been based. Established in 1694, it is the second oldest central bank in the world...
- Bank of ScotlandBank of ScotlandThe Bank of Scotland plc is a commercial and clearing bank based in Edinburgh, Scotland. With a history dating to the 17th century, it is the second oldest surviving bank in what is now the United Kingdom, and is the only commercial institution created by the Parliament of Scotland to...
- Barclays Bank
- Clydesdale BankClydesdale BankClydesdale Bank is a commercial bank in Scotland, a subsidiary of the National Australia Bank Group. In Scotland, Clydesdale Bank is the third largest clearing bank, although it also retains a branch network in London and the north of England...
- The Co-operative Bank
- HSBC BankHSBC BankHSBC Bank may refer to any one of the following principal local banks for HSBC Group:- Americas :* HSBC Bank Argentina* HSBC Bank Brazil* HSBC Bank Canada* HSBC Bank Chile* HSBC Bank Costa Rica* HSBC Bank El Salvador* HSBC Bank Honduras...
- Lloyds TSB Bank
- Nationwide Building SocietyNationwide Building SocietyNationwide Building Society is a British building society, and is the largest in the world. It has its headquarters in Swindon, England, and maintains significant administration centres in Bournemouth and Northampton...
- National Westminster BankNational Westminster BankNational Westminster Bank Plc, commonly known as NatWest, is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group is ranked as the second largest bank in the world by assets...
- Royal Bank of ScotlandRoyal Bank of ScotlandThe Royal Bank of Scotland Group is a British banking and insurance holding company in which the UK Government holds an 84% stake. This stake is held and managed through UK Financial Investments Limited, whose voting rights are limited to 75% in order for the bank to retain its listing on the...
In 2009 three and a half million cheques and three hundred thousand paper credits passed through the British interbank clearing system each working day. Cheque volumes reached a peak in 1990 when 4 billion cheques were written but usage has fallen since then. This is mainly due to alternative methods of payment such as Direct Debits
Direct debit
A direct debit or direct withdrawal is an instruction that a bank account holder gives to his or her bank to collect an amount directly from another account. It is similar to a direct deposit but initiated by the beneficiary...
, Bacs payments
BACS
Bacs Payment Schemes Limited is a United Kingdom scheme for the electronic processing of financial transactions. BACS direct debits and BACS direct credits are made using the BACS system...
and more recently, the Faster Payments Service
Faster Payments Service
Faster Payments Service is a UK banking initiative to reduce payment times between different banks' customer accounts from three working days using the long-established BACS system, to near real time...
, being used more widely by both individuals and businesses. The annual rate of decline of the volume of cheques being used is now in double figures.
2-4-6 changes to cheque clearing
From the end of November 2007, changes known as 2-4-6 came into force. These have increased clarity and certainty when paying in cheques to a bank or building society account.The 2-4-6 changes set a maximum time limit of two, four and six working days for each of the stages after paying in a cheque to a current or basic bank account. The timescales cover cheques, bankers' drafts, bankers' cheques and building society cheques paid in to sterling current and basic bank accounts. For deposit or savings accounts the maximum time limit for withdrawal is longer (6 days, rather than 4).
For the first time, after paying in a cheque, customers can be sure that at the end of six working days, the money is theirs. They are protected from any loss if the cheque subsequently bounces, unless they are a knowing party to a fraud. The timescales also set maximum times when customers start earning interest on money paid in (2 days) and when it will be available for withdrawal.
See also
- UKPA
- UK Payments
- Clearing House Automated Payments SystemCHAPSThe Clearing House Automated Payment System or CHAPS is a British company established in London in 1984, which offers same-day sterling fund transfers...
- Bankers Automated Clearing ServicesBACSBacs Payment Schemes Limited is a United Kingdom scheme for the electronic processing of financial transactions. BACS direct debits and BACS direct credits are made using the BACS system...
- Payments Council
- Faster Payments
External links
- Cheque and Credit Clearing Company
- British Bankers' Association Understanding the cheque clearing cycle
- Association for Payment Clearing Services The Cheque and Credit Clearing Company