Can My Friend Pay His Cheque into My Account?

Q.

My friend recieved a UK cheque with his name on, however he doesn't have a bank account. Can he endorse it to my name and could I put it in my account?

A.

“After section 81 of the Bills of Exchange Act 1882 there shall be inserted the following section—81A—(l) Where a cheque is crossed and bears across its lace the words "account payee" or "a/c payee", either with or without the word "only", the cheque shall not be transferable, but shall only be valid as between the parties thereto."

Up until 1992, there was no reason why a person could not hand over a cheque, made payable to themselves, to someone else for them to pay into their own bank account. You simply had to write the name of the person on the back of the cheque and that was it – job done.

However, as you can see from the quote above, the law has since been changed and now all cheques have to be crossed. You will notice cheques now have crossing lines across them and the account payee printed across the front of the cheque. This move was done as a way to decrease instances of fraud.

So, this makes it a risk on the bank’s behalf to accept a crossed cheque into the bank account of someone other than the name printed on the front and as a general rule of thumb, they just do not accept them.

However, this doesn’t mean that there isn’t a way. Over the last decade a number of agencies have set up shop on the high street that say they will exchange a cheque for cash. Originally this was marketed as a way of people getting instant cash from pay-day cheques without having the wait for the standard three days.

Of course, these agencies accept the risk that the original cheque could be fraudulent and as a way of counter acting this they tend to charge a fee, typically a percentage of the cheque’s value.

If you do want to use one of these agencies as an alternative, then you will no doubt be required to provide some form of identification and also, you should find one that is registered with the British Cheque Cashers Association (BCCA).

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