Does anyone know about the law in the UK for the maximum time banks must clear cheques?
The cheque clearing system in the UK is run by the Cheque and Credit clearing company. The time taken for clearing cheques is actually a practical issue rather than a legislative one. Cheques are paper items, which are physically transferred between banks. Although the paying bank receives some of the data electronically, the cheques themselves must also be transferred. This is so that they can be examined by the paying bank for security and fraud prevention purposes, to ensure that the cheque has been made out correctly and to make the decision whether to return a cheque unpaid. Despite the central clearing timescales individual banks may decide to allow customers to withdraw cheque funds more quickly. However, if a cheque bounces before the end of the 6th working day after paying in, then the bank may seek to reclaim the cheque funds. The cheque clearing cycle The way in which the clearing cycle works is explained below. This example is basedon a customer paying a UK sterling cheque
