NOT TRANSFERABLE CHEQUES

Why “Cross” a Cheque?

Most people and companies cross cheques, so they can’t be used if they find their way into the wrong hands.

But there are various ways of crossing cheques and the various crossings mean different things. In some cases you may not have been getting the legal protection you thought you were.

From 1 January 1996, as a result of amendment to the Cheques Act 1960, crossing a cheque with “not transferable” (or “non transferable”) means:-

• It can’t be transferred to someone else.

• It can only be paid into the bank account of whoever it is made out to, ie: the payee name must be correct.

Alternatively, writing “account payee” or “a/c payee” (either with or without the word “only”) has the same effect.

Crossing your cheques in this way will provide better protection against fraud or theft.

How the Rules May Affect You

Examples

• You run a store, a pub or a service station. You know your customers, and when they can’t get to the bank you’re happy to help them out by accepting the cheques they sign over to you.

If they’re “not transferable” cheques, don’t accept them, as, under the law, only the person they were made out to can bank them.

• You’ve just bought a business and kept the old name, or maybe you’ve taken on a new partner. Whatever the reason, your trading name is different to your bank account name.

Make sure your customers write their cheques out to your correct bank account name. Alternatively, ensure your business name and bank account name match.

• You’re selling your car over the weekend, and you have a buyer. But he doesn’t have quite enough cash, and he wants to sign over his pay cheque to you.

If it’s “not transferable” don’t take it, because under the legislation, your bank could decline to accept it. Then, you’ll have to track down the buyer and get him to pay you again.

• You’re elderly, or disabled, or it’s just not convenient to get to your bank. You normally sign any cheques you receive over to the local supermarket.

If the cheques are crossed “not transferable”, your supermarket may not accept them.

Not Transferable and Account Payee Cheques

What They Mean

When you receive a cheque:-

· Don’t accept a “not transferable” or “account payee” cheque if it has been transferred to you. Only accept it if it was made out to you in the first place.

· Make sure your name is written correctly. It must be the same as the name of your bank account.

· If you don’t have a bank account, or depositing your cheque at the bank isn’t convenient, ask the issuer for a cheque that can be transferred.

· Be aware you won’t be able to endorse it or transfer it to anyone else (they won’t accept it anyway). It can only go into the bank account of whoever it was written out to.

When you write a cheque:-

· You must make sure the name of the person receiving the cheque is correct. It must be the same as the name of their bank account.

· If you’re writing cheques for people who may not have a bank account (eg: children) don’t cross the cheque with “not transferable”.

· If you normally write “account payee” cheques, be aware their status has changed. Whoever receives them won’t be able to transfer them to a third party.

Other Ways of Crossing Cheques

You can still cross a cheque using two parallel lines with or without the words “not negotiable”, which will enable the recipient to transfer the cheque if they want to.