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Cheque clearing system Frequently Asked Questions

What happens to my cheque when it's invested in my Newcastle Building Society savings 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 Newcastle Building Society during the course of a day's business. These are normally passed to our Bankers that evening.

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.

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 will I be 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 Newcastle Building Society 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 cashing.

Why have I been charged for a returned cheque?

Newcastle Building Society will not charge you for the first returned cheque received on your account. We are charged by our Bankers for each unpaid cheque but 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?

Newcastle Building 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 that we do not charge for the first unpaid cheque returned on an account. The customer must remember that we are 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.

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

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

You should remember 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 withdraw funds within three days against a cheque then realistically it should be invested in a bank account.

In exceptional circumstances Newcastle Building 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 Newcastle Building Society would receive the full amount. Under these circumstances we 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.

However, you should be aware that the bank may not always be willing to do this.

Can I make a withdrawal against an uncleared cheque?

Ordinarily the Newcastle Building Society will not allow withdrawals against 'uncleared' funds for six days following receipt of a cheque.

However, if you have sufficient cleared funds within other Newcastle Building Society accounts to cover the balance, you may be able to make a withdrawal on an uncleared cheque. 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 informed of an 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 two options for you to choose from:

1. 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 Newcastle Building Society in writing that the cheque had been paid. Upon receipt of the written confirmation then payment would be allowed.
2. A cheque can be banked under 'Special Presentation', subject to payment of a fee. Newcastle Building Society then posts 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.