Call for faster payment clearing

The Office of Fair Trading (OFT) has called for the time taken for cheques and electronic payments to clear to be cut further.

The trading watchdog said the Payments Council had made improvements to the clearing times, but in some areas progress had been "disappointing" and more work was necessary.

The OFT said, during a review of the Council, that since the setting up of the Payments Council in 2006 the industry had a better strategic aim.

It also said the Council had overseen some important changes, including introducing the Faster Payments Service, allowing people to make and receive payments in a matter of hours instead of three working days.

Another change was making the time in which cheques cleared quicker.

However, the OFT felt the Council was not quick enough in driving better payment times, with the Faster Payments Service only running at a capacity of 69% across the member banks.

It said more attention also needed to be given to contingency plans to ensure that if one payment system failed, others could take the strain.

The group also called on the Council to be more proactive in establishing where improvements were needed, rather than simply reacting to external pressures.

Cavendish Elithorn, senior director of services at the OFT, said: "The Payments Council is a real improvement over the previous governance arrangements of the payments industry.

"But more work is needed to sharpen the Council's focus on the flexibility and efficiency of its systems and to make sure benefits are passed on to the end-user.

"This is why we have recommended measures to ensure the Council delivers transparently and fully on its objectives to make the payments industry work well for both consumers and business."

The OFT has called on the Council to ensure the Faster Payments System is rolled out fully across all member banks.

It also wants it to commission an accountancy firm to report in two years' time on how well it has performed against its objectives relating to contingency plans, and for the Council to provide a self-assessment of its performance every two years.