Banks and Cheques

[Outbackmanyep]

We were advised a few weeks ago that banks are now not going to accept cheques that are not made out to persons or businesses unless the Payee is written in full.

Fancy that, bounce a cheque just because you wrote "Ace Tomato's" instead of "Ace Tomato Company PTY LTD", then slug you $35-00 fee for a bounced cheque.

Talk about turning the screws!!!!

So please beware of your bank doing this to you!

[awesome]

Yes , just like not clearing a reserve bank cheque for three days! Thought reserve bank cheque was as good as cash , apparently not any more.
Makes you wonder if the reserve bank is a bad risk and if so , why take any notice of their interest rate recommendations.
Venting completed.
Leon.

[OneOfOne]

My wife asked me to put a cheque into her account about a month ago, so to save time I used the "express" box. More than a week later they had no record of it! About two weeks later it finally turned up :mad2: (you're talking in excess of a grand too).

After enquiring about what had happened we found out something I don't think anyone would expect would be the procedure. I would expect that the staff would go to the box throughout the day and grab the deposited cheques and process them, or maybe in the morning or close of business....nup not even close. A contract company comes in during the day and empties the box and takes all the cheques to a clearing house for processing. No one in the bank has any idea of what cheques were deposited or who by. If you need to contact someone to find out about the cheque, the bank where you deposited it is not the place to start :screwy: Unfortunately, like most I think, I didn't keep the little deposit thingy...who does, so we didn't have a number for reference. Of course, they should never have lost it in the first place. If you had the reference butt and they had lost it, what help would it be anyway?

Next time we have a cheque, I will be depositing it personally, I want the teller to enter it on the system and stamp that it went in!

[leon]

Awesome, Leon, we have another Leon. :lol:

Leon :thumbsup:

[mdgodf]

I suppose it depends on wether you wanted to pay someone called Ace who owns a tomato or a company...you can't tell which. The Bills of Exchange Act has been around since 1909 and Banks should obey the Law - a cheque is a bill of exchange and must be drawn and paid according to the Act. I, for one, would like Banks to be even more diligent about the proper operation of my accounts given the emergence of identity theft and fraud etc.

[rally]

This is always the problem when dishonest people take advantage of the discretion in a system and use it to their illegal advantage.

They gain, the victim, loses, the institution can become liable and the honest person become disadvantaged as the rules get tightened and discretion goes wayward.

I think you will find that simple typos are acceptable - they are on a legal document.

Ace Tomato Company Pty Ltd in the mean time needs to tighten up on its advertising and use of its trademarks unless it also has registered the trading names of "Ace Tomatoes", "Ace Tomato's", "Ace and Sons Tomatoes" . . . . . !!!!

Maybe soon the Bank will soon insist we bank directly to an individual or businesses tax file number - wont that be fun.

[Dujon]

No, Outbackmanyep, that's not the case. The bank/branch of deposit is entitled to refuse acceptance of a cheque or other instrument if the payee is not consistent with the name of the account to which is intended to be deposited. Such has been the case for years and years and years.

The bank which holds your account has no idea as to whom you paid the cheque - apart from the payee you described - and thus has no control over the acceptance process. Ergo, no dishonour fee as the cheque cannot be dishonoured (for that reason).

Over the years local circumstances have tended to prevail (e.g. Fred's Pub as opposed to Frederick's Hotel). This is normally safe for the banks - which do take on responsibility for the acceptance of misdirected notes - but some 'smart' operators seem to have taken advantage of this, not that it's a new scam by any means.

Even I over the years have suffered. I use the name 'John' but it's not my first given name. You can probably imagine the problems?

[hogly52]

I actually "found" my cheque book the other day and realised I hadn't used it for some 3 years. If it's not transacted with a direct deposit, it's done with a card and a prompt e-transfer of funds to the card.

Cheers,

Graeme

[Outbackmanyep]

Hi John, I see your point, but the thing i was trying to get across is that the bank we are using has started doing this. If i was "Ace Tomato Company Pty Ltd" and someone paid me a cheque with "Ace Tomato's" written on it, i would deposit that in my bank, the teller would accept it but through the internal system it gets knocked back. The cheque comes back to me, i get hit with a fee

[Cerberus]

do all banks check the details throughly? when I do cheque or cash deposit i usually put an initial for first name and it's fine, business name not sure
also, i once tried that express cheque deposit a while back, no record of it was found until almost a month later, they still could/would not tell me what really happened to it

[GTB_an_Owl]

i once took a cheque to my bank and needing to use some of it as fast as i could i asked the teller how long it would take to clear
three days she said
how much would it cost for a "speed " clearance i said
$6 she said
how long would it take to clear i said
THREE days she replied

go figure

geoff

[Cerberus]

depending on bank/financial institution speed clearance will only cut 1 possibly two days from processing time, even if it's from the same bank or the reserve bank!

[mark3d]

banks can clear cheques instantly but you need to know the secret word

you can beg and plead and they will say they cant do it. but you ask for a "special clearance" and they will clear it on the spot, for a fee usually like $20.

its almost as though they are legally required to do it but dont advertise it because they dont want to do it.

thats got me out of a bind a couple of times.

[Dujon]

I don't understand that. If, for instance, someone had made a payment to "Ace Tomato's" and that firm claimed that the payment had not been received and then a check through the banking system revealed that it had been banked to a different entity (in this case "Ace Tomato Company Pty Ltd) then there's going to be a bit of a stoush. There are many reasons why a cheque can be dishonoured and the reasons for such are usually described in short but descriptive terms - e.g. Drawer Deceased (the signatory to the cheque was, presumably, alive when the signature was appended to the cheque but has since died and the account, due to legal constraints is now frozen); Present Again (the signatory is usually a good person and can be expected to deposit the requisite funds in the next few days); Effects not clear (the signatory has the funds in the account but, because of the domino effect and clearance time, they also are awaiting clearance).
I'd best not clutter up the forum with more than that. I would though be interested to see if you can find out the reason for such an occurrence. If you do PM me.

[Cerberus]

yes i know about those places where you can get a cheque cashed instantly, as long as you can accept the fee, usually a percentage of the cheque, and that you're sure it won't bounce

[WeeGraeme]

Clearing a cheque has nothing to do with the financial standing of the bank. In most cases, it has nothing to do with the financial standing of the drawer of the cheque either. It's simply about security and the amount of theft that goes on. When you think about it, stealing a cheque drawn on the Reserve Bank is actually a sure thing as far as knowing if the cheque will be honoured on the basis of availability of funds.

[robgreaves]

Being a brit, I can give you the lowdown on cheque clearance. We invented cheques and most of the modern day banking system.

The 'clearance' time of 3 to 5 days was originally to allow the person with the feather quill, curly wig, and ink pot to produce the hand written ledger for the banks and all the cheques, then allow the ink to dry, it to be verified, sealed with wax, and then for it for be taken (by carriage and horse normally) from one side of London to the other, or somewhere else in the country.

The modern day banks obviously saw this rather british historical oddity as a nice little earner - when you write the cheque, your money comes out of your account very quickly indeed as soon as your cheque is presented at the recipients bank, but is held by the bank to earn what we brits call a 'nice little earner' in investment return interest. They have the historical 3 to 5 days to invest your money, keep the profits, then give the recipient of the cheque the money. Thanks very much.

By charging $20 to 'fast clear' a cheque,this is just the general average offset of not being able to earn that interest.

Another case of the banks are no longer there for the customer's benefit - it's very much the other way round.

Regards,
Rob.

[rally]

Most cheques below a certain value are never verified by a human other than a casual glance by a teller if they are dealt with over the counter - they are scanned using the OCR characters on the cheque.

Signatures are not verified

So I could have my dog sign a cheque for 235 cases of juicy Romas as Fred Bloggs for an amount less than $2000 and it WILL be cleared - so long as the rest of his paw writing was legible !

So if the teller banks it into Ace Tomatoes account then I think you are safe and sound.

However at a later date should the transaction be challenged, the details might be examined.

More pulp for the puree

[asterisk]

Amazing how the time for "clearance" also gets applied to electronic transfers. When I do a direct credit - money instantly leaves my account but does not appear in the recipient's account for at least 2 days. How do they justify this? (Besides being able to use the payee's money for their own purposes for those 2 days).

Cheers

[mdgodf]

Overnight processing...day 1 debit your account and credit (money goes to) the Bank's Exchange Settlement Account at the Reserve Bank. Day 2 (overnight) Bank's ESA account is debited and funds credited to the recipient's account - assumes payee and recipient accounts are at different banks; no real time processing, that only happens within the same bank.

[asterisk]

This does not negate my statement about funds being available for other uses. The money in the ESAs is "borrowed" overnight for short-term "investment" and the available supply of money in the ESFs is the means by which the Reserve Bank manipulates the level of interest rates in the economy.

My statement is that someone else besides me (the payer) and the recipient (the payee) has these funds for their own uses for the period of time claimed for clearance - not just my funds, but all funds from inter-bank transactions.

Cheers

[KG8]

Don't worry about it, when the global economic collapse hits us things like checks will be redundant anyway as all transactions will have to be done electronically. Soon after that cards will be replaced by implants, the perfect system, designed to stamp out crime and fight terrorism.

[mdgodf]

Indeed someone else allways has your money in the intervening period.

[mdgodf]

If anyone's interested in how the Reserve Bank's market operations work in details click here: http://www.rba.gov.au/MarketOperations/Domestic/open_market_operations.html