Cheque fraudsters force rule change
Saturday 10 December 2005
Customers will no longer be able to make cheques payable solely to their bank or building society under new rules designed to combat fraud. The Financial Services Authority (FSA), the UK's chief City regulator, has agreed a deal with banks and building societies under which they will stop accepting cheques made out only to them from next October.
Currently, many people paying money into a current or savings account make cheques out to the name of the account provider rather than to themselves.
However, the FSA said fraudsters had been abusing the system, intercepting such cheques and paying them into their own accounts.
The fraud is difficult to detect because where a cheque is payable to a financial institution rather than an individual, there is no way of checking who the funds are meant for.
From next year, account providers will therefore require all such cheques to carry further details, including the name of the account holder for whom the money is intended.
Adrian Coles, the director-general of the Building Societies Association, said people should not wait for the protection afforded by the new rules.
"It came to our attention that cheques which were written only to an institution, not a named account, had been used in a fraud," he said.
"It is important that people get into the habit of adding extra details to their cheques now."
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