Plans to curb Payment Council's powers

ChequeThe payments body which tried to phase out cheques before staging a U-turn after the "anxiety" caused could see its powers curbed under new proposals.

The Payments Council would lose its power to govern the payments systems for UK banks under the plans.

The Government published a consultation on reforming the regulation of payments in the UK and said its preferred option would be to create a new body called the Payments Strategy Board, to monitor and make recommendations to the payments industry.

It would be run by a mixture of senior industry and non-industry representatives, including people from consumer groups.

The new body would ensure that consumers' views were "fully considered" as part of the decision-making process, the Government said.

The proposals followed concerns that the payments industry did not always respond effectively to consumers' needs.

The Payments Council, which sets out the strategy for the payments industry in the UK, suggested in 2009 that cheques should be phased out by banks and building societies from 2018. But in July last year, it reversed its decision to abolish cheques after coming under widespread pressure from MPs and consumer groups.

Although the Payments Council made clear that other options would need to be available before cheques were abolished, at the point when the Treasury Select Committee launched an investigation into the issue in April 2011, no progress was found to have been made to develop suitable alternatives.

Critics suggested the move had been made for the convenience of banks, rather than full consideration being given to the impact on the people who relied on being able to use cheques. The Government said the council's original decision had caused "considerable anxiety" for many people, particularly the elderly and those who relied on cheques to conduct their daily business, such as charities, clubs and small businesses.

The Government wants to receive feedback on the proposals from the payments industry, consumers, consumer groups and trade bodies. The consultation will run until October 10.

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