It adds millions to the national coffers every year and we must allow for changes in the law to enable banks to keep up with the changes brought about by the electronic revolution. The Government is committed to cutting put red tape and helping business to prosper. I believe these proposals do that. Banks will benefit because the proposed new system will be less cumbersome and will cut out paperwork. Customers will also benefit from a more efficient service.
Technology allows the main details of a cheque to be read and transmitted electronically.
This makes the physical presentation of a cheque unnecessary. Although many banks can already take advantage of computerised systems, the current law obliges them to present cheques physically as well. Under a system of truncation, cheques would be retained at an earlier point in the clearing cycle. This could be in the collecting bank or centrally in the paying bank. There would be no need to send the cheques back to the home branch.