Parliament has asked the banks to consult more widely on what may be far-reaching changes for consumers to the Bills of Exchange Act.
Proposals from the Banking Council, the Consumer Institute of South Africa, and experts regarding amendments to the existing Act were heard by the Parliamentary Portfolio Committee on Finance this week.
The Banking Council is keen to see three aspects written into law.
* A standardised method of crossing a cheque as "not transferable";
* The ability to make use of electronic imaging of cheques, currently prohibited under law, to cut out the loss of cheques in the banking system; and
* In a major departure from the law as it stands, banks want sophisticated account-holders to take greater care to help prevent cheque fraud.
If an amendment to the Act is accepted, to enjoy the protection of a cheque you issue as "not transferable", you will have to make sure that you cross your cheque correctly. At present you are can mark a cheque in a number of ways to make it not transferable.
Kevin Daly, of the Banking Council, says cheques marked as "not transferable" are safer to use especially when sent by mail and the public is increasingly making use of such cheques. A "not transferable" cheque can only be paid into account and cannot be cashed over the counter at a bank.
Banks have to take greater care when collecting these cheques, Daly says, because they must ensure that nobody other than the designated payee receives payment.
The proposal standardises the use of this cheque in such a way that banks are more readily able to comply with their obligations in collecting these cheques, he says.
Professor Leonard Gehring, an expert in negotiable instruments, argued against using standardised markings for "not transferable" cheques, saying it limits an individual's freedom of expression.
The Banking Council's push for the amendment which places a duty of care on account-holders when it comes to preventing fraud, is an attempt to make those who are negligent, for example, a company that does not lock up its cheque books, liable for any loss. In its present form, this amendment will affect only sophisticated account-holders such as companies, government departments and close corporations and not individuals.
The Portfolio Committee on Finance has postponed any decisions for consultations.
The Committee will formally consider the Bill on October 3.