Banks issue cheque books too freely, say grocers

Press, 25 July 1985, Page 16

Banks issue cheque books too freely, say grocers

Banks are issuing cheque books too freely, according to the president of the local branch of the National Association of Retail Grocers of New Zealand (NARGON). Mr Keith Roper said the subject of cheques and their use had been discussed at the recent Nargon conference in Hastings. Retailers were concerned at the way banks issued cheque books without ascertaining that the person they

gave a cheque book to was of substance, he said. “I feel that they should be required to have a greater degree of responsibility in ascertaining a person’s ability to meet cheques.” Another problem faced by retailers dealing with cheques was identification, said Mr Roper. Often a customer would come in and identify themselves with what a shopkeeper thought was good identification and when the

cheque bounced the address would be incorrect, he said. Banks would not reveal a customer’s address for confidentiality reasons, said Mr Roper. “The other problem is slow clearance of cheques by Trusteebanks.” It could often take up to seven days to clear a cheque and by that time the person who had written it was gone and the shopkeeper could not track them down, he said. There was not a lot that retailers could do to protect themselves, said Mr Roper. “In my own case I try to weigh a person’s appearance and get them to write their name, address and phone number on the back of the cheque, and I do not give change.” Mr Roper said that many retailers made themselves vulnerable by accepting pre-written cheques made out for large amounts of money. A cheque should be written in front of the shopkeeper, he said. Mr Max Bradford, the executive director of the Bankers’ Association, said that in terms of the number of cheques that were dishonoured the problem was very small. About 400 million cheques were written each year by New Zealanders and less than 0.04 per cent were rejected because of insuffi-

cient funds, wrong dates, wrong years or no signature, he said. The association regularly got letters from Nargon about banks issuing cheques too freely but “the scale of the problem is very low compared with the total volume of cheques and experience overseas.” “Our argument is that retailers these days have other options available to be sure they get payment.” These included asking for payment using Visa or Bankcard, or verification using a credit card which gives the retailer $5O protection should the cheque be rejected, or a cheque could be accepted on the basis that the goods could not be collected until the cheque was cleared. Mr Bradford said that he thought banks did enough when issuing a cheque book. “It’s the old problem of where do you draw the line at interfering with a persons individual rights.” “If there are any grounds for suspicion the banks will do their own checks before opening an account.” Mr Bradford said that when the new EFT/POS (Electronic Fund Transfer at Point of sale) machines become more widely used, retailers would have a better level of guarantee. When a card is put through it will tell the retailer if sufficient funds are held.