Office of Fair Trading
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Payment systems working better for consumers but more to be done, OFT finds
The time it takes for electronic bank payments and cheques to clear for consumers has speeded up but further improvements are needed, the OFT announced today in its Review of the Payments Council.
The Review has been carried out to look at how the Council is measuring up in making the payments industry work for consumers and businesses.
The OFT found that there is much more effective strategic direction of the industry since the Payments Council was set up in 2006. Key improvements the Council has overseen include the speeding up of slow cheque clearers as well as the implementation of the Faster Payments Service, which allows consumers to make and receive payments within a matter of hours rather than previously having to wait for up to three working days.
However, the OFT also found that the Council's progress has been disappointing in some areas. It is still too slow in driving improved payments for customers, with the Faster Payments Service only operating at 69% capacity across member banks. Also, more attention needs to be given to the Council's integrity objective, which includes putting plans in place to ensure that if one payment system fails, the others can take the strain. The Council should also be more proactive in establishing where improvements are necessary, rather than reacting to external pressures.
Cavendish Elithorn, OFT Senior Director of Services, said:
"The Payments Council is a real improvement over the previous governance arrangements of the payments industry. But more work is needed to sharpen the Council's focus on the flexibility and efficiency of its systems and to make sure benefits are passed on to the end-user.
"This is why we have recommended measures to ensure the Council delivers transparently and fully on its objectives to make the payments industry work well for both consumers and business."
Main recommendations coming out of this Review are that the Payments Council should:
* Focus on the delivery of actual benefits to consumers, including ensuring the Faster Payments scheme is rolled out fully across all member banks.
* Commission an accountancy firm to report in two years on how well it has performed against its integrity objective.
* Provide a self-assessment against its objectives every two years, which must include a consultation with stakeholders.
The Review of the Payments Council is available at: http://www.oft.gov.uk/shared_oft/reports/financial_products/oft1071.pdf
NOTES
1. The Payments Council was set up in 2006, resulting from a recommendation of the Payment Systems Task Force. The speeding up of cheques and the Faster Payments Service was agreed by the OFT-chaired Task Force and the Payments Council oversaw their implementation. http://www.oft.gov.uk/shared_oft/reports/financial_products/oft901.pdf
2. The Task Force agreed the OFT would review the work of the Council after two years to score its performance against its three main objectives, look at its broader success in facilitating progress in payments systems within its remit and look at its effectiveness to provide lasting change in the payments industry and to set a development plan for any areas of concern.
3. The Payments Council first met in March 2007 and assumed responsibility for setting the strategy for UK payment systems and ensuring that that they meet the needs of users, payment services providers and the wider economy.
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