King attacks banks delay in clearing cheques

The governor of the Bank of England last night launched a direct attack on the banking industry for the time it takes to clear cheques.

Mervyn King used his keynote annual Mansion House Speech to criticise high street banks for taking longer to process cheques and electronic payments than any other major economy. "In the area of retail payments it is disappointing that the UK now takes longer to clear payments - whether cheques or electronic payments - than almost any other member of the G10 [group of 10 richest nations]," he said.

He told the audience, which included leading figures in banking and financial services, that the Bank would work with the Office of Fair Trading to "explore ways in which that performance can be improved".

Gordon Brown last year ordered the OFT to set up a task force to investigate the clearing system.

Last night, the Association of Clearing and Payment Settlements (Apacs) said it was surprised at the comments.

"I am not sure that is completely correct that we take longer than other members of the G10. Most of them don't use as many cheques as us," said a spokeswoman.

"The Bank has been a member of Apacs since it was established but it is only very recently that they have been converted to the cause of rapid payments."