Clause 231
Banking Bill
3:30 pm
Angela Eagle (Parliamentary Secretary, HM Treasury; Wallasey, Labour)
I have to admit that the hon. Gentleman probably has a point with respect to the clause on Scottish cheques. It was originally unsuccessfully introduced as a private Member’s Bill in 1999. It is a deregulatory clause which modernises the treatment of cheques in Scotland and aligns their treatment with the rest of the UK. The abolition of the “funds attached” rule will mean that if several cheques are presented simultaneously when there are insufficient funds to satisfy all of them, the bank will choose which it can satisfy from the funds available. That could be done in a way that would do the least damage to the interests of the customer of the bank while also ensuring that some creditors receive payment. The current legislation is outdated and can cause problems with the smooth running of financial transactions by causing delay, expense and inconvenience for banks and their customers.
The Committee of Scottish Clearing Bankers estimated in 1999 that the “funds attached” rule causes expense and inconvenience for approximately 100,000 bank customers each year. It was also estimated in 1999 that the retention of the “funds attached” rule causes Scottish clearing banks an administrative expense of £270,000 a year. The hon. Gentleman is right about clause 231. It is a deregulatory clause that accomplishes something that many people have wanted. It is not controversial. It is within the scope of the Bill. That is why it is here, but for me to stand here and say that it has a major bearing on financial stability would probably be pushing it a bit, if I could put it that way. It is something that many people have wanted. It benefits consumers in Scotland. It irons out a little kink in the law. That is why it is here in this part of the Bill. I put my hands up, but it is still a reasonable thing to do.