Bounced cheques: Banks take separate views
The two main commercial banks have reacted differently to comments by the Malta Association of Credit Management which recently claimed that the problem of dishonoured cheques bounced back.HSBC Bank reported a reduction in the percentage of dishonoured...
The two main commercial banks have reacted differently to comments by the Malta Association of Credit Management which recently claimed that the problem of dishonoured cheques bounced back.
HSBC Bank reported a reduction in the percentage of dishonoured cheques but Bank of Valletta said the problem had remained constant and it was not happy with the situation.
"We are proud to say that we have improved the position significantly and reduced the extent of dishonoured cheques," Ray Briffa, speaking on behalf of HSBC said.
"HSBC only returned 12.5 per cent of total cheques unpaid by all banks in 2006 (0.17 per cent of total HSBC cheques issued), and this compares with our market share of 45.4 per cent of total cheques issued by all banks."
He said the bank returned a higher number of cheques for business than for personal customers.
"HSBC tackles repeat offenders strictly. Issuance of cheque books is stopped when returned cheques total six or more in a single calendar month. If the problem is repeated and/or this conduct continues, then we will normally close the customer's account. We require our customers to act in an ethical manner as they do with us,' Mr Briffa said.
"We take dishonoured cheques very seriously and, prior to resorting to this measure, we explore all possible avenues with the customer, including a review of their finances, budgeting and facilities. In respect of personal customers, we try to contact them as far as practicable before dishonouring cheques and try to establish whether we can make an arrangement to honour the cheque. When more than six cheques are dishonoured in one calendar month, the customer is contacted and advised not to issue further cheques unless covered by suitable deposits. In addition, no further cheque books are issued on that particular account. We may then close the account if the problem continues."
He said there is no formal system whereby the banks share information or cooperate. However HSBC stores information on cheques dishonoured by other banks which passes through its system and uses this information when vetting new account opening requests.
"In this way, we ensure that, as far as possible, we do not "inherit" customers who were a problem with other banks."
Asked whether HSBC favoured legislation on dishonoured cheques, as MACM has proposed, Mr Briffa said the bank had proved through its actions that even through a voluntary code of conduct, concrete results could be achieved.
Mr Briffa said that while the use of cheque books remained very popular, customers were increasingly turning to alternative methods of payment such as direct debits, direct credits, ATM usage, internet banking and debit/credit cards.
Bank of Valletta said the issue of dishonoured cheques was one that it monitored very closely.
"Commercial banks in Malta apply a code of conduct that governs this issue. Bank of Valletta is guided by this code. However, notwithstanding these efforts, the amount of dishonoured cheques has not decreased.
In December 2006, for example, there was an increase in the number of dishonoured cheques although, when taken as a percentage of the total cheques transacted, this remained stable and in sync with the previous months," Michael Galea, head of communications, said.
"Clearly, we are not happy with the situation and all efforts will continue to be made to address this issue and to strengthen our controls in this area.
"The reality, however, is that cheques still remain a very popular payment method in Malta and notwithstanding the increase in popularity of alternative payment methods such as card and internet banking payments, the use of cheques is still on the increase."
Mr Galea said BOV was tackling the problem as laid down in the code of conduct. The code, drawn up under the aegis of the Malta Bankers' Association, says the banks should immediately hold discussions with customers who have three or more cheques dishonoured in a month and insist that they refrain from this practice immediately.
If more cheques that are dishonoured are issued or the number of dishonoured cheques exceeds six in a month the bank would consider granting a credit facility to meet these payments consider restructuring the customer's finances wihdraw the cheque book and close the account/withdraw credit facilities; inform the customer that payments to third parties have to be made by bank draft.
As for possible legislation, Mr Galea said the bank coordinated its position within the Malta Bankers' Association and it would not be prudent to comment separately in this regard.
HSBC Bank reported a reduction in the percentage of dishonoured cheques but Bank of Valletta said the problem had remained constant and it was not happy with the situation.
"We are proud to say that we have improved the position significantly and reduced the extent of dishonoured cheques," Ray Briffa, speaking on behalf of HSBC said.
"HSBC only returned 12.5 per cent of total cheques unpaid by all banks in 2006 (0.17 per cent of total HSBC cheques issued), and this compares with our market share of 45.4 per cent of total cheques issued by all banks."
He said the bank returned a higher number of cheques for business than for personal customers.
"HSBC tackles repeat offenders strictly. Issuance of cheque books is stopped when returned cheques total six or more in a single calendar month. If the problem is repeated and/or this conduct continues, then we will normally close the customer's account. We require our customers to act in an ethical manner as they do with us,' Mr Briffa said.
"We take dishonoured cheques very seriously and, prior to resorting to this measure, we explore all possible avenues with the customer, including a review of their finances, budgeting and facilities. In respect of personal customers, we try to contact them as far as practicable before dishonouring cheques and try to establish whether we can make an arrangement to honour the cheque. When more than six cheques are dishonoured in one calendar month, the customer is contacted and advised not to issue further cheques unless covered by suitable deposits. In addition, no further cheque books are issued on that particular account. We may then close the account if the problem continues."
He said there is no formal system whereby the banks share information or cooperate. However HSBC stores information on cheques dishonoured by other banks which passes through its system and uses this information when vetting new account opening requests.
"In this way, we ensure that, as far as possible, we do not "inherit" customers who were a problem with other banks."
Asked whether HSBC favoured legislation on dishonoured cheques, as MACM has proposed, Mr Briffa said the bank had proved through its actions that even through a voluntary code of conduct, concrete results could be achieved.
Mr Briffa said that while the use of cheque books remained very popular, customers were increasingly turning to alternative methods of payment such as direct debits, direct credits, ATM usage, internet banking and debit/credit cards.
Bank of Valletta said the issue of dishonoured cheques was one that it monitored very closely.
"Commercial banks in Malta apply a code of conduct that governs this issue. Bank of Valletta is guided by this code. However, notwithstanding these efforts, the amount of dishonoured cheques has not decreased.
In December 2006, for example, there was an increase in the number of dishonoured cheques although, when taken as a percentage of the total cheques transacted, this remained stable and in sync with the previous months," Michael Galea, head of communications, said.
"Clearly, we are not happy with the situation and all efforts will continue to be made to address this issue and to strengthen our controls in this area.
"The reality, however, is that cheques still remain a very popular payment method in Malta and notwithstanding the increase in popularity of alternative payment methods such as card and internet banking payments, the use of cheques is still on the increase."
Mr Galea said BOV was tackling the problem as laid down in the code of conduct. The code, drawn up under the aegis of the Malta Bankers' Association, says the banks should immediately hold discussions with customers who have three or more cheques dishonoured in a month and insist that they refrain from this practice immediately.
If more cheques that are dishonoured are issued or the number of dishonoured cheques exceeds six in a month the bank would consider granting a credit facility to meet these payments consider restructuring the customer's finances wihdraw the cheque book and close the account/withdraw credit facilities; inform the customer that payments to third parties have to be made by bank draft.
As for possible legislation, Mr Galea said the bank coordinated its position within the Malta Bankers' Association and it would not be prudent to comment separately in this regard.