Do banks understand the clearing cycle?

The Banking Code Standards Board have published the results of their mystery shopping to see how many banks understood the impact of the 2-4-6 cheque clearing process.  They found there is confusion among bank staff.  They looked for the ability of bank staff to provide clear and accurate information about cheque clearing times.  They also checked whether banks had changed their terms and conditions to bring them into line with the new clearing rules.  In November 2007, the Cheque and Credit Clearing Company standardised maximum cheque clearing times.  This was to help customers know how quickly they could benefit from interest on cheques paid in, how soon underlying funds could be withdrawn and when they could be certain a cheque would not be returned unpaid.  Only one bank provided correct information on all the tests.  At the other end of the scale, a bank gave wrong answers in nearly 60% of cases.  The main area for confusion was calculating the day on which a cheque would not be returned unpaid (certainly of fate).  Some staff gave a description of the clearing cycle before the 2-4-6 changes were implemented.  One bank quoted an 8 day clearing cycle.  Two banks had not advised customers of the changes to the terms and conditions on their accounts.

Bank Law Blogger posted on 2-4-6 in November 2007.

The Vienna Sales Convention

To the casual observer, it might not be obvious why the Vienna Sales Convention is relevant to banking law but I see the Financial Markets and Law Committee have said the Convention will apply to derivative contracts where there is provision for physical delivery. It could extend to cover other financial instruments falling within the category of choses in action. The Convention provides a “uniform law governing the formation of cross-border sale of goods contracts, and delimiting certain substantive rights and obligations arising”. The Convention was adopted in 1980 and came into force on 1 January 1988 but the UK is not a party. Most EU countries, the US, China, Canada, and Australia have adopted the Convention and Japan is about to ratify it. In October 2007, the FMLC set up a Working Group to investigate potential legal uncertainties for the financial markets that would arise from UK implementation of the Convention. The paper sets out the problems of legal uncertainty for financial instruments and makes a plea for express consideration to be given in legislation that implements the Vienna Convention.

Rome 1 conference

Do you need to catch up on Rome 1 or get 5.5 Law Society CPD points under your belt?  The Regulation will come into force on 17 December 2009.   There will be a conference on Rome 1 on 19 September, £140, by the Birmingham Law School, in London.  Rome 1 is shorthand for the now inevitable adoption by the UK on the new choice of law rules in contract.  Earlier posts on this blog, when there was still some doubt as to whether the UK should join, are here.  The conference will cover the position generally, and in the fields of financial services, insurance, IP & e-commerce.