Consumer bodies have brought pressure to bear on the banks, who were taking steps to shift the costs involved when cheques are lost or forged onto their customers.
A modification to the legislation proposed by the Council of South African Banks (Cosab) to the Bills of Exchange Act is being discussed.
Cosab's proposed legislation was intended to free the banks from liability if forged cheques are paid out as a result of your carelessness. The modification proposed by consumer bodies is that the onus for proving negligence should be carried by the banks, not their customers. At present, if your cheques are stolen or misused, the banks have to carry the cost.
Kevin Daly, a legal adviser for Standard Bank and a member of the Cosab committee, says this is as a result of laws dating back to the 19th century which say that the bank must only act on instructions from the drawer of the cheque (the cheque book owner).
Daly says cheques are currently the only payment mechanism where the bank is liable for your negligence.
In all other forms of banking, including electronic banking, you bear a financial loss if you are careless.
"Our feeling is that if you want to stop escalating fraud, then you have to look at shifting the liability to the person who can prevent the loss.
"There is no incentive for people to take better care of their cheque books if, when things go wrong, the banks simply pick up the tab."
Daly says from a purely "common sense perspective" the responsibility for loss should be borne by the person who is able to prevent it.
However, when Cosab drafted the original proposal, it did not consider that it was going to have the effect that consumers could be put in a position where they would have to sue the bank to get payment on a forged cheque. Cosab acknowledges there were valid objections to the original suggestion.
"We recognise that the banks can easily afford legal action, but that the average consumer cannot."
The new version of the draft legislation, intended to put the onus of proof of negligence on the banks, will be discussed with consumer bodies and with the Reserve Bank, which is handling the matter for the Department of Finance.
"This is a fair compromise position," Daly says. "It doesn't bring us up to the level of protection they have in the United States, France and Germany where there are very strict duties on the drawers of cheques to take care, but as a compromise position it should be accepted."
If a cheque forgery falls into the grey area where your negligence cannot be proved and the bank cannot be held responsible either, Daly says the latest proposal if accepted by consumer bodies will still place liability on the shoulders of the bank.
One of the most worrying aspects of cheques from the banks' point of view is forged signatures. Forged signatures on cheques cost Standard Bank nearly R3,5 million in 1996 whereas fraudulent alterations to amounts or the name of the payee cost about R310 000.
"It is easier for us to control alterations on cheques by using security paper, water-soluble inks and so on. It's harder to keep a check on forged signatures when all we have on file is a piece of cardboard with the drawer's authorised signature."
He feels it is unreliable to base an entire verification process on a signature and says no amount of new technology will solve this problem.
Daly says he would personally like to see cheques disappear altogether.
"We did a calculation which showed that a cheque is physically handled by more than 20 people from the time of being drawn to the time of being presented. At any of those stages something can go wrong."