New UK Cheque Rules To Help Combat Fraud
Banks and building societies in the UK have introduced new rules to try and stop fraudsters from stealing millions of pounds in cheque fraud. Under the new rules, bank customers with cheque book facilities will no longer be able to make their cheques payable to a particular bank or building society but instead will be required to write the name of a named beneficiary on the cheque.
 So, rather than being able to write a cheque out to ABC Bank, under the new rules the issuer of the cheque will have to write the cheque out to Mr. Smith. While this is not a fool-proof way of avoid cheque fraud in the UK, as cheques may still be stolen in the post and used to open up bogus bank accounts in the name of the named beneficiary, it is hoped that the new system will help to dramatically reduce cheque fraud in the UK. Given that most UK banks and building societies were willing to credit cheques payable to the bank or building society to any account, the practical reasons why this should be the case are evident.
Following a general crackdown on fraud in the UK financial services that has seen most success with the Chip and PIN on UK credit cards, this latest step by UK banks and building societies will hopefully get people “into the habit of adding extra details to their cheques rather than risk a cheque being declined or their money fraudulently deposited into someone else’s account”, Adrian Coles, Director-General of the Building Societies Association said.
Nevertheless, keep in mind that under the new rules if you do send a cheque by post to someone and that cheque is stolen and fraudulently banked in a false bank account, you may now find it even more difficult to claim a refund from the bank where the cheque was fraudulently deposited, especially if this bank is not the same bank as you bank at. Consequently, you should always be thinking twice about sending cheques via the post and before you do so make sure that you check out if you will be able to get a refund from the bank in the event that the cheque is stolen.
What you will no longer be able to do, however, is write a cheque out in the name of a bank or building society in the UK.
Richard Smith
10th October 2006
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