OFT says banks should pay interest on 'floats'

Banks should pay interest to customers while they process cheques and electronic payments, the Office of Fair Trading (OFT) said yesterday.

The group said the banking system should not be able to benefit from an interest-free "float" while it cleared standing orders and telephone banking and internet payments. The OFT also called for customers to be given greater clarity over the clearing times for payments and the receipt of funds.

The British Bankers' Association said the OFT's response was one of many it had received in relation to the comprehensive review of the Banking Code currently being carried out by Professor Elaine Kempson of Bristol University. It said: "We all support greater transparency for consumers and the review of the Banking Code is itself an open process."