Elderly 'will struggle without cheques'

Consumer groups today urged banks to ensure there were workable alternatives in place before cheques were phased out.

Charities warned that older people would be hit particularly hard by the Payment Council's plans to end the use of cheques by 2018.

Appearing before the Treasury Select Committee, Jane Vass, of Age Concern and Help the Aged, warned that the move could make older people vulnerable as they may resort to keeping large amounts of cash in their home or giving their debit card and Pin to someone they did not know that well.

She said: "Older people are the highest users of cheques. Twenty-one per cent of people say moving away from cheques will be a major problem for them."

She added: "It will force older people who are capable of managing their own affairs to be dependent on others."

Ms Vass said the charity accepted the need to manage the decline of cheques, but said they had asked for alternatives to be introduced before a target date for the end of the cheque was set.

She said: "But so far we haven't yet seen specific, clear, fleshed out alternatives we can test with older people to see if they are workable."

She added that the charity was concerned the alternatives would have "minimal functionality" and be run with "minimal cost to the banks".

"We are concerned that a lot of the problems are being drawn underground," she said.

Teresa Perchard, policy director of Citizens Advice, said older people were not the only group that relied on cheques, saying they were also used by people who needed to make small payments for their children, such as for Brownies or school trips.

She added that there were between one million and two million people who did not have bank accounts that had transactional facilities.

Ms Perchard also challenged the idea that cheques could be completely phased out, pointing out that despite efforts by the Government to have all benefits paid electronically, 340,000 people still receive their money by cheque each week.

She said: "That is why the idea that cheques are in terminal decline needs to be looked at as a question.

"There are still going to be people who need some kind of paper model to make and receive payments that is more secure than cash."

The committee also heard from Louise Richards, of the Institute of Fundraising, who said small charities and hospices received more than 70% of their donations through cheques.

Geoff Holland, chief executive of the British Cheque and Credit Association, added that cheques were still "by far the most convenient and cost effective way of paying bills" for small businesses.

He added that the alternatives were often more expensive for small firms, even though they cost the banks less.