ICS is an innovation that cuts down cheque clearing times from a possible six days to one day by sending a digital image of the cheque for clearing, rather than the paper cheque itself.

In November 2017, the Treasury consulted on proposals to make provision for two measures in secondary legislation to support the introduction of the ICS. The first is that a copy of a paid cheque (or other paper instrument), along with some additional information, be provided to the payer upon his or her request, and that the copy can be used as evidence of payment, rather than the original.

The second measure means that if a customer paying using a cheque incurs a loss in connection with the presentment of a cheque under the ICS (that did not result from gross negligence or fraudulent activity on their part), and has not received compensation, the payee’s bank must compensate this customer for this loss.

If the paying bank incurs a loss (in the event they have already paid out compensation to the customer) the payee’s bank must compensate the payer’s bank.

The Treasury says the aim of the proposed legislation is to ensure that the ICS, which will clear all cheques by October 2018, has no detrimental impact on the existing position of cheque users.

There were fifteen responses to the original consultation and the Treasury also engaged with four other institutions.

Legislation to support cheque imaging: response to the consultation is here.

Report by Pat Sweet