An End to Checking in the UK Raises Concerns for Charities

Ina major shift from traditional financial policy, the UK will end the use ofchecks as a valid payment method by October 31, 2018.  The PaymentsCouncil of the UK (an independentbody that sets strategy for the UKpayments system) provides a brief overview of this decision and links to moredetailed reports on its website.  The endof checking in the UK will potentially have a negative impact on the UK’s voluntarysector for several reasons; convention, security and fund-raising practices.

Accordingto RL Glassspool Charity Trust, a grant-making charity, more than half of thegrants it transacted in 2009 were paid out by check.  RL Glasspool says that it is only one of manygrant-making charities whose infrastructure is built on the assumption thatchecking will continue to exist.  Thesecurity concern is not unfamiliar in transitions to e-commerce.  Specifically, RL Glasspool is worried aboutweakening financial controls caused by the switch from requiring two signatureson a check to requiring the entry of two passwords into a computer system.  The consequences of changing the grantpayment infrastructure sound grim according to RL Glasspool’s chief executiveFrances Moore who told ThirdSector that “no practical payment method exist[s]to replace checks.” Theissue of fund-raising concerns donor practices. Given the age demographics of their donor-base, many UK charities areconcerned that an end to checking may be an end to a large amount offunding.  ThirdSector reports that the Payments Council and the Institute ofFund-raising will meet this week to discuss concerns.Specifically, the Institutedoes not believe that there has been sufficient consultation on the move andwants to ensure that acceptable alternatives are in place well before banksstop using checks.

Respondingto concerns about the phase out of checks without adequate alternatives, Sarah McCarthy-Fry, parliamentarysecretary to the Treasury, statedthat “the Government believes it is imperativethat adequate alternatives be in place for all users of cheques, including smallbusinesses, the elderly and the third sector, ahead of any potential closure ofthe check clearingsystem.”

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