Cheque Clearing System

• What happens to my cheque when it is invested in my Newcastle Account?
• What is a "bounced cheque" and how quickly are you notified of these?
• Why am I charged for an RD Cheque?
• It wasn't my cheque, why have you charged me?
• My cheque has been debited from my bank account, why can't I withdraw against this?
• Can I make a withdrawal against an uncleared cheque?
• Why do you insist on 6 days before withdrawals are allowed?
• I really want to put this cheque into my Newcastle account, Is there any way I can do this and still have access within 6 days?

What happens to my cheque when it is invested in my Newcastle Account?

The cheque clearing system involves the transmission, and settlement of payments between accounts held at different banks. The cheque clearing operates on a three day processing cycle:

• Day 1
  You invest your cheque into your account with the Newcastle during the course of a day's business. These are normally passed to our Bankers that evening.
• Day 2
  The next day our bankers deliver the cheque to an exchange centre, where it is handed over to the bank on which it is drawn.
• Day 3
  On the morning of the next working day, staff at that bank will review the cheque and make a decision about whether to pay or return it.

What is a "bounced cheque" and how quickly are you notified of these?

All cheques run through the three day process outlined above. If, on receipt at the "drawing" institution, there are insufficient funds for the cheque to be paid, then this cheque will not be honoured.

A cheque which is to be dishonoured (bounced) is returned by first class post direct to the point where it was invested, or in some cases to a central returns unit within the clearing centre.

As such the earliest the Newcastle would be notified of a "bounced" cheque would be the morning of day four. There are some circumstances where a decision regarding dishonouring a cheque can be delayed until the day following presentation.

Why am I charged for an RD cheque?

The Society will not charge for the first RD or returned cheque received on a customers account.

The Society is charged by our Bankers for each unpaid cheque although, as a gesture of goodwill, we do not pass these charges to our customers for the first cheque returned on their account.

On receipt of the first unpaid cheque, we will return the cheque to the account holder, together with a letter notifying the customer that they will be charged for future unpaid cheques. The Society will, upon receipt of any further unpaid cheques, apply an administration fee to the account in question.

As a Customer Service issue, the Investment Manager can, in exceptional circumstances, review a case and, depending upon the circumstances, make a decision about reversing the fee.

It wasn't my cheque, why have you charged me?

The Society appreciates that on occasions unpaid cheques could belong to a third party, and that our customer has invested the cheque in good faith, not realising that the cheque would be returned unpaid.

This is one reason why we do not charge for the first unpaid cheque returned on an account. The customer must remember that the Society is charged by our bankers for each returned cheque and whilst we are happy not to pass charges for the first returned cheque we must ensure that additional charges are passed to the appropriate account holder.

Where a cheque has been returned from a third party, the Society would suggest the account holder takes the matter of the charge up with the person who drew the original cheque.

Those people who run their Newcastle accounts as business accounts must be aware that charges will be incurred for returned cheques. The advantage to these customers of running this type of account with the Newcastle is that there is no annual administration fee which would be applied by say a High Street Bank.

My cheque has been debited from my bank account, why can't I withdraw against this?

The Society will not allow withdrawals against any "uncleared cheques" for 6 days following receipt.

It must be remembered that we are not a bank, and our accounts are not intended to offer the functionality associated with a "current account". If someone wants to obtain value within three days against a cheque then realistically it should be invested in a bank account.

In exceptional circumstances the Society would allow a withdrawal against an uncleared cheque, providing the bank on whom the cheque was drawn would confirm in writing that the cheque had been paid and that the Society would receive value. Under these circumstances the Society would have an indemnity from the bank confirming that the cheque would be honoured, and would be prepared to allow a withdrawal. Ordinarily the Investment Manager will liaise with his Line Executive to gain approval.

It must be pointed out however that in some cases the bank may not be prepared to do this.

Can I make a withdrawal against an uncleared cheque?

Ordinarily the Society will not allow withdrawals against "uncleared" funds for six days following receipt of a cheque. There is however one circumstance in which the Society would allow such a withdrawal.

If a customer has sufficient cleared funds within other accounts, the balances of which would cover the "uncleared" amount. In these cases a "stop" would be applied to the other accounts to ensure no loss is incurred by the Society.

Why do you insist on 6 days before withdrawals are allowed?

It will ordinarily take three working days for a cheque to go through the clearance system, however it can take up to an extra three days to be advised of the unpaid cheque.

I really want to put this cheque into my Newcastle account, Is there any way I can do this and still have access within 6 days?

There are a few options open to you, which are listed below:

• The cheque would be banked as normal, and you could then contact your bank following three working days and ask if they would confirm to the Society in writing that the cheque had been paid. Upon receipt of the written confirmation then payment would be allowed.
• A cheque can be banked under "Special Presentation", subject to payment of a fee. The Society then post the cheque directly to our Bankers by first class mail. Upon receipt they then post this cheque to the bank on which the cheque was drawn. This bank, upon receipt of the cheque, will then notify our bankers on, potentially working day 4 and inform them whether the cheque will be paid or not.

It must be stressed that as this service depends heavily on first class post there may be occasions where we do not receive notification of the cheque status within the time-scales outlined above. Clearly if the cheque goes "missing" within the system we can not allow a withdrawal against these funds.