Small Business, Enterprise and Employment Bill — House of Lords, 2015-03-03
Topic: Domestic Commerce
Richard Newby (Liberal Democrats, Centre to centre-left): My Lords, Amendments 7 to 19 and 84 make two technical but essential changes to the cheque-clearing provisions relating, first, to consistency in the treatment of cheque and non-cheque paper instruments and, secondly, to the continuation of current statutory protections for the paying customer Amendments 7 to 9 and 19 are designed to ensure that non-cheque instruments, such as warrants and travellers’ cheques, are treated in the same way as traditional paper cheques under the new provisions for electronic presentment. Under the new legislation for cheque imaging, as currently drafted, it would be possible for corporate customers and other large non-bank customers to make arrangements to submit cheque images directly to the central switch that clears cheque transactions for all member banks, rather than their bank submitting images on their behalf. This would make the clearing process more efficient. However, the current drafting means that this option will not be available for non-cheque paper instruments that are not drawn on a bank The Government’s policy intention is to provide for a system that treats cheques and non-cheques in the same way, and therefore it is necessary to make these amendments to ensure the equal treatment of non-cheque instruments in all circumstances of presentment. On the basis of current practice, this approach does not present any difficulties. However, it is possible that the position could change in the future—for example, as a result of the development of new types of instruments that do not currently exist. For this reason, Amendment 9 confers a power on the Treasury to restrict the circumstances in which presentment by image is permissible. This power is intended to be used to deal only with any unforeseen issues that may arise in the future and could not be used to have any retrospective effect on instruments that have already been presented by image. It is subject to the affirmative procedure Amendment 12 is intended to ensure the continuation of current statutory protections for the paying customer. Under the existing cheque clearing system, a customer who makes a payment with a cheque can request the original cheque to be stamped "paid", which stands as prima facie evidence that the payee has received the amount payable. This provides a protection for the payer in situations where the payee claims that they have not received payment The legislation for cheque imaging does not provide for an equivalent protection when cheques or other paper instruments are paid in by electronic image and the physical instrument does not end up in the possession of a bank. It has become clear that the loss of this protection would remove a useful service currently relied upon by some cheque users. Therefore, it is necessary to make an amendment to preserve this type of protection for the paying customer under electronic cheque clearing. This amendment will confer a power on the Treasury to make appropriate provision in regulations, subject to the affirmative procedure, because the precise nature of the evidence to be provided to the payer may depend on the technical design of the clearing system. The regulations will be able to set out the nature of the evidence to be provided to the payer and the effect of that evidence, including the weight to be given to such evidence Amendments 10, 11, 13 to 18 and 84 are consequential amendments dealing with the procedure for making regulations under Amendments 9 and 12, and they provide minor and technical clarifications of the drafting To conclude, these amendments will ensure that the provisions for electronic presentment treat cheques and non-cheques consistently and that existing customer protections continue under the new system. I beg to move.