UK banks will be forced to speed up cheque clearing times

Clearing times for cheques could be cut to two hours as the Office of Fair Trading (OFT) puts pressure on banks to commit to a faster system for customers.

The Association for Payment Clearing Services, Apacs, will meet with the organization next month to commit to a new system for speeding up clearing. Cheque clearing can currently take up to seven days, which can cause difficulties for companies and individuals relying on the money.

The OFT estimates that banks earn GBP30 million a year from keeping money deposited by customers for several days before transferring the funds to the recipient's account. The watchdog has already forced banks to speed up transfer times on automatic payments such as direct debits and internet banking.

Customers will have to wait until 2007 to see the new times implemented.