Cheque complaints on rise, says Banking Ombudsman

A sharp decline in the use of cheques has not reduced the number of cheque-related complaints, says Banking Ombudsman Nicola Sladden.

“New Zealanders’ use of cheques has more than halved in the past five years as electronic payments gain popularity, but complaints to us have risen in the past 12 months.

“The main causes of complaint were delays in processing cheques and the failure of bank staff to act as instructed or promised. But we’ve also seen that people still don’t understand how to write cheques to ensure they go to the person intended.

“To do that, you should write either ‘account payee only’ or ‘not transferable’ on the cheque. This tells the bank it can deposit your money only into the bank account of the payee.

“Writing ‘not negotiable’ on a cheque merely means it can’t be cashed. It doesn’t stop it going into someone else’s account. Nor does crossing out the words ‘or bearer’ prevent a thief from depositing a cheque.”

She said a recent interesting case highlighted the importance of cashing cheques as soon as possible.

The bank had closed the complainant’s investment account while he was overseas and sent the cheque to his point of contact, his mother. She eventually sent him the cheque, which he mislaid. Fifteen years later, he found it. The bank refused to honour it, saying it had no record of the account or cheque, and that it might have been asked to cancel and reissue it.

“The fact is banks are required to keep records for no more than seven years, so it’s quite conceivable the bank could have honoured a reissued cheque.”

Ms Sladden said another interesting case concerned a customer who objected to giving the bank some identification when she presented an open cheque. The amount was under $1,000, and she felt the bank had no right to collect information about her.

“We found the bank acted correctly. Banks are legally required to request ID for amounts above $10,000, but they are entitled to do so for lesser amounts, too.”

According to Payments NZ, New Zealanders made an average of eight transactions by cheque in 2015 compared with 18 in 2010. For every cheque written last year, New Zealanders made 51 electronic payments, compared with 18 electronic payments for every cheque in 2010.

The scheme acts independently in hearing complaints for free from bank customers. For more information about cheques see our Quick Guide on Cheque clearance.

Ends

© Scoop Media