Money News: OFT gets banks to speed up their act on cheques
Sunday 19 November 2006
Banks are to clear customers' cheques within set time limits under a new deal with the Office of Fair Trading.
At present, cheques typically take three days to clear before interest is credited and cash can be withdrawn.
But under new rules due to come into force in November next year, money deposited in any account will start to earn interest - or will count against overdrafts - within two working days.
Account holders will be allowed to withdraw funds from a maximum of four working days after the cheque is deposited.
And, unless the payee is a knowing party to fraud, financial institutions will have only six working days in which to take money deposited by cheque back out of an account. In other words, a cheque won't bounce after six days.
These changes - to apply to all accounts, including "basic" bank accounts - were agreed by the Payment Systems Task Force, an industry review body set up by the Office of Fair Trading. The task force concluded there was no case for a "complete rebuild of the cheque clearing system".
Cheque use is falling by 8 per cent a year, and other changes proposed earlier this year will speed up electronic payments by internet or phone - methods commonly used in preference to cheques. By late 2007, funds being transferred electronically should reach bank accounts on the same day the customer deposits them.
The move was welcomed by consumer bodies.
"Britain's centuries-old cheque-clearing system has for too long been slow and confusing," said Philip Cullum from the National Consumer Council. "This will benefit many customers, offering them greater certainty and better service."
Energy: British Gas ads ruled 'misleading'
British Gas has come under fire from the Advertising Standards Authority for a "misleading" claim in its adverts.
The adjudication follows a string of television and press ads that said: "Every 60 seconds, someone switches back to British Gas".
In Scotland, the same claim was made in reference to British Gas's subsidiary, Scottish Gas.
A member of the public queried the ad after calculating that its claim amounted to more than 526,000 people per year, which he believed was an exaggeration.
Rival supplier ScottishPower also made a challenge. Having won plenty of business from customers switching away from Scottish Gas, ScottishPower said it believed there were insufficient numbers of customers remaining to support the company's claim.
Following these complaints, the advertising watchdog launched a probe.
British Gas provided figures that showed the number of new energy customers (signing up for gas and/or electricity) it had registered across the UK during 2005 and so far in 2006 averaged out at two new energy contracts every minute.
But after investigating, the ASA ruled the 60-seconds claim was misleading as it included new customers and not just previous customers returning to British Gas from other providers.
The gas giant acknowledged that the figures included people who had not previously been British Gas customers and could not be described as "switching back to British Gas".
The ASA ruled that the adverts should not be published or broadcast again in those forms, "unless there is sufficient substantiation to back up the claims made" (see Comment, page 19).
British Gas offered to change the tagline to say: "Every 60 seconds, someone switches to British Gas".
Communications: Broadband deals 'failing customers'
The launch of "free" broadband has led to a "customer satisfaction freefall", according to a new report from price-com- parison service Uswitch.
Its findings highlighted how fierce competition and falling prices have not always led to better service over the past six months. Overall, customer contentment levels have fallen by 9 per cent among broadband users and 4 per cent among home phone users.
There are now 11.7 million broadband and 23 million home phone customers in the UK. Many get both services from the same company (often as a condition of the "free" broadband deal), meaning that they are more likely to have cause to speak to their customer services department.
Virgin.net came top in the broadband study, with 85 per cent of its customers satisfied with the overall service they receive. Languishing at the bottom, each on 70 per cent, were Orange and TalkTalk - both of which have launched free broadband products this year.
In the home phone market, Tiscali overtook TalkTalk to take first position with 81 per cent overall customer satisfaction, but both providers have experienced a sharp fall in ratings since March. NTL came bottom, with a third of customers dissatisfied with its phone service.
Uswitch spokesman Steve Weller said the fall in overall satisfaction levels among home phone users was a direct result of the converging market. "The probability that consumers are coming into contact with customer services on a more regular basis has increased significantly as the developments in the industry raise the likelihood of more and more people signing up for bundles with a single provider."
Mr Weller said the arrival of low-cost broadband deals had boosted the number of subscribers by nearly 650,000 since March. "But it is disappointing to see the majority of providers failing to accompany the growth in customer numbers with sufficient growth in customer service operations and the required investment in their technology to ensure they are looking after customer needs."
Consumer trust in suppliers, he added, was at an all-time low.
"The worst-performing category across both the home phone and broadband reports was the lack of certainty that suppliers are ensuring customers are on the best available deal."
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