Bouncing cheques left hundreds short of cash over Christmas

HUNDREDS of people who lodged cheques the week before Christmas had their holidays ruined because their money was not cleared in time by the banks, according to Fine Gael TD Frank Feighan.

"It should not take five working days for the banks to clear a cheque. This is causing problems all over the country and affected many people's Christmas. Particularly at Christmastime, the banks should have used their discretion and cleared cheques in three days. They were able to clear cheques in two to three days before the recession and should have reverted to this over Christmastime in a gesture of good will," he told the Sunday Tribune. "Many business and individuals who have been trying to pay their bills such as direct debits and ESB over Christmas are having cheques returned because they haven't cleared in time. Cheques are bouncing because they haven't been cleared. If your cheque bounces, you incur a charge from your bank. The banks are making a lot of revenue from cheques bouncing at the moment. It has happened to me personally."

Jim Curran, head of research at the Irish Small and Medium Enterprises association (Isme), said many businesses were suffering because of a cashflow difficulty at the moment and some companies were unwittingly bouncing cheques because of the five-day clearance time. Isme was aware of cheques being bounced by companies because they took so long to clear, he said.

"This is affecting the reputation of reputable companies. The banks being closed over Christmas has obviously created another delay. It's our view that it should not take the banks five working days to clear a cheque."

Feighan, a Fine Gael TD for Roscommon/South Leitrim, is also a newsagent and businessman. He recently paid 12 creditors by cheque after lodging a cheque several days earlier; all of these cheques then bounced.

"I was obviously extremely embarrassed. I then incurred a charge of €120 from my bank because they all bounced."

A spokesman for the Financial Services Ombudsman said it could not comment on whether it had received any complaints in relation to the clearance of cheques over Christmas but said it investigates any such complaints on an individual basis.

A spokeswoman for the Central Bank said banks reopened on Wednesday and the "cheque clearing system is working as normal". The Irish Banking Federation was unavailable for comment as its office is closed until ­tomorrow.