MPs kept up the pressure for the return of cheque guarantee cards today by suggesting that the Government could consider stepping in with legislation.

The Payments Council, whose members include Britain's biggest banks, abandoned the cheque guarantee card in late June due to declining use before reneging on plans to end the use of cheques altogether.

Key Points

  • Calls for cheque guarantee cards to return
  • MPs suggest Government could step in with legislation
  • Payments Council is researching the impact of closing the scheme

The Treasury Select Committee published a report on the future of cheques in August.

It warned that without a guarantee scheme or alternative mechanism, cheques could "wither on the vine" due to the risk of shops and other bodies refusing to accept them without knowing whether or not they will bounce.

The Payments Council is set to publish research into the impact of the closure of the cheque card guarantee scheme, which will be concluded before the end of the year.

It promises: "If so indicated by the research, we will revisit the business case for the closure of the scheme."

But in a document publishing responses to the report today, the select committee says the Payments Council should provide more details about its research and on the decision-making process.

It says: "The Government threatened to legislate to preserve cheques prior to the Payments Council's change of heart.

"When the Payments Council's report is to hand, the Government may wish to consider whether intervention on the guarantee card is also warranted."

Calls for cheque guarantee card reintroduction

Campaigners for older people, who are less likely to use methods such as internet banking, have been fighting for the return of the cheque guarantee card.

Michelle Mitchell, charity director of Age UK, says: "Age UK has been calling for months for the reintroduction of the bank guarantee card or some other method to ensure that retailers can have confidence in cheques.

"This report is a strong signal to the Government to ensure that banks listen and protect what is an essential method of payment for many older people."

The committee also wants to strip the Payments Council of its power to cancel cheques and other payment methods in the future.

The Government is set to consult on options for a new regulatory structure for the Payments Council early next year.

The committee says: "Bringing the Payments Council within the scope of financial regulation is needed to ensure there is never again a repetition of the cheques debacle.

"The Payments Council was able to take decisions affecting millions of people at its own initiative without any effective scrutiny by a regulatory body."

Essential payment method for millions

The proposal to scrap cheques provoked outrage from small businesses, charities and pensioner lobby groups, who accused the banks of ignoring the needs of millions of vulnerable people.

Treasury Committee chairman Andrew Tyrie says: "The Government can consider whether intervention on the cheque guarantee card is needed when they have the Payments Council's report on the guarantee card to hand.

"The Treasury Committee will monitor the Government's work on this closely."

He continues: "The Government's acceptance of our recommendations to bring the Payments Council within the scope of financial regulation is good news for millions of people who want to keep their cheque books.

"It will also offer consumers some protection against being bounced by the Payments Council into other changes that would disadvantage them."

Cheque usage has declined by 70% since 1990 and by 42% in the past five years, according to the Council, with usage expected to decline by a further 40% during the coming five years.