From October 2017 a new accelerated cheque clearing system will be introduced across the UK by the clearing banks.
The Professional Practice team and Financial Compliance team have spoken to a number of the Scottish banks with a view to achieving a satisfactory outcome for our members in this situation. The information we are receiving from the banks is that this is a mandatory industry initiative by the Cheque & Credit Clearing Company which is being made throughout the UK on behalf of HM Treasury. The banks are not able to introduce a provision to ensure that all solicitors’ cheques will be honoured, and in order to mitigate the risk of cheques not clearing in time, transactions should be settled via CHAPS or other electronic transfer.
What should you be doing now?
• We suggest that you speak to your business banking relationship manager about your specific firm requirements.
Ask your bank if they could simply agree to honour settlement cheques drawn on your client account in the event that an incoming settlement cheque does not clear within the same time as your outgoing cheque.
Speak to your bank about arranging a temporary facility that would allow the bank to transfer sufficient funds into the client bank account to meet the presentation of an outgoing cheque where the incoming cheque has still to clear. Any interest payable could be charged to the client, although that would have to be specified in the relevant terms of business.
• It is important to remember that paying out a cheque on the basis of a cheque you have received is not in itself a breach of the Accounts Rules. The breach will only occur when a cheque is returned unpaid with the reason “Refer to Drawer”, i.e. the cheque bounces and your client account is in deficit. If this occurs then we would urge you to contact our Financial Compliance team, who will be able to talk you through what the next steps for your firm would be. The team can be contacted on 0131 476 8177 or email@example.com.
• Where possible, consider settling by CHAPS or other electronic transfer. We appreciate that is not always possible; however, you should consider the potential impact of settling by cheque. When sending funds by electronic transfer, it is good practice to agree in advance that those funds will be held as undelivered pending fulfilment of certain conditions.
If you are experiencing difficulty with your bank or have any questions, we will try and assist where we can. You can contact the Professional Practice team on 0131 226 8896 or firstname.lastname@example.org
In this issue
- Immigration detention: a case of overuse
- Sexual harassment: don't suffer in silence
- Child disputes: a quicker way through?
- Brexit: where are we now and what happens next?
- Reading for pleasure
- Opinion: Claire McKee
- Book reviews
- President's column
- ScotLIS: the citizens' tool
- People on the move
- People matter
- Historic abuse: the fairness matrix
- Landmark year in legal IT
- Sentence, but no full stop
- Opening up arbitration
- Making the agent pay
- Equal pay: beware the mass claims
- Dealing with conflict
- Claims outside the rules
- Pension transfers – history repeating itself?
- Last instructions
- Scottish Solicitors' Discipline Tribunal
- Standard missives: an unachievable dream?
- SOLAR powered
- Disability rights
- Law reform roundup
- Too hard a drive?
- Settlement: can you avoid cheques?
- Q & A corner
- When 25 is the new 35
- Sorry; not sorry
- Ask Ash
- Plan sets ambitious 2017-18 targets
- Letting agents: prepare to register
- Paralegal pointers
- A way to make an impact