Crossed Cheques

A source of great confusion is the use and meaning of a crossing on a cheque. Crossed cheques (which are now standard for most personal cheque books) must be paid into bank accounts - they can't just be exchanged for cash. Cheques are always transferable - you can pass on a cheque made out to you to someone else for them to pay into their account as long as you endorse the cheque with your signature. But you can write Not negotiable' on a cheque which means that whoever it's passed on to can't have a better right to payment than the person who passed it on had - so if it's a stolen or forged cheque, there can be no claim on the person who wrote the cheque and it should be worthless. It's fairly common practice to write 'Account payee' or `Account payee only' across the crossing on a cheque - the intention is to make sure that the cheque is paid only into the account of the person to whom the cheques made out. But in fact these phrases have no statutory significance at all and are not as effective as you might think.

Out-of-date cheques A cheque once written must be presented at the bank on which it's drawn within a reasonable time - most banks allow six months. After that, the cheque is no longer valid.

Forged cheques When you open an account, you're asked to provide a specimen signature. This enables your bank to check whether cheques bearing your signature seem really to have been signed by you rather than someone trying to forge your signature. The bank must not pay out on a cheque where the signature is not yours, and it would normally be wholly liable for any loss if it paid out against a forged cheque - no matter how skilful the forgery. But you could be liable if you suspected that the forgery had taken place or could have done (for example, if you'd lost your cheque book) and failed to alert your bank.

Signatures change, and though banks don't normally ask you for a repeat specimen of your signature, it would be a good idea to provide a new one if you're aware that yours has changed.

WARNIWARNING If a cheque is stolen, it's easy for a thief to NG open an account at a building society or bank in the name of the person to whom the cheque is written and then withdraw the money a few days later. This is possible because, while many building societies ask for a specimen signature, they don't normally check the identity of the person opening the account, and though banks will usually ask for some proof of identity (for example, a passport or driving licence), this may have been stolen along with the cheque book. At one time, banks always took up references on new customers but most no longer do so. The jacks Committee has recommended that checks should be made on new customers to reduce the likelihood of this type of crime.

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One of the key features of a current account is the Debit Card. In spite of an increasing tide of plastic money, cheques are made out by the million every day and still account for almost all non-cash transactions.

Writing cheques

A bank must pay out on a cheque which has been properly drawn by the account holder, as long as the account is in credit, or there's an agreed overdraft limit. You should take care when writing a cheque to prevent the possibility of someone else altering it. If you write a sloppy cheque that allows room for alteration, you - not the bank could be liable... see: Cheques

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