Just a random sampling before I ask somewhere more sensible…

Does anyone know a lot about how cheque clearing works?

I paid a contractor by cheque on a Friday afternoon, kind of assuming that he wouldn’t manage to bank it that day. He did manage to bank it and when I went to my online banking on Monday to make sure I had the funds to cover the cheque, I saw that it had bounced. So, I phoned the contractor, apologised and paid by card.

A few weeks later, I noticed that the damn cheque was still bouncing and had ultimately been paid. So the contractors have my money twice.

My bank says that the money from the cheque has definitely gone. The contractor says that he doesn’t have the money.

So, where could it be?

It seems to me that either:

A. The contractor is lying
B. My bank has made a mistake
C. The contractor’s bank has made a mistake

A bit of Googling hasn’t made the clearing process any clearer to me. Any thoughts?

If a cheque bounces someone has to represent it to get the funds.

So either;

The contractor did
or
The contractors bank did

Id’ talk to your bank and ask them when the cheque was represented and by whom.

Special clearance whereby you pay to have the cheque cleared early would create that situation. Just tell him to represent it again. Nothing you can do to about any bank charges as you instructed the bank to pay the payee by issuing the cheque.

From what I remember bounced cheques automatically get represented up to 3 times. When you paid by card you should have called your bank and cancelled the cheque.

Your contractor will probably end up with the funds but they may not show in his bank until 3 to 5 days after it showed as clearing from your bank.

Yeah, I put my hands up to the bank charges since I was at fault in the beginning. I paid extra on the card payment to cover the charge he got for the bounced cheque.

But the amount at dispute is £800 and I’m not going to let it go.

In hindsight, muffin man is right but I didn’t know it would get represented automatically. The contractor could have asked for it to stop being represented as well, I guess, but I’ve got more incentive since I’m the one who loses out.

The money from the cheque left me on September 28 so I would have thought that if it was going to clear, it would have done so by now.

Any idea who could actually sort this out? My bank? His bank?

your bank will confirm he’s had the money but it’s really up to him to hand it back to you.

As wwaswas said. If he’s denying all knowledge a solicitors letter normally does the trick which you can add to his bill.

Cheques are bounced in one of two ways:

RD = Return to drawer
RDPR = Return to drawer please represent.

In the first instance (and less common) the bank is saying don’t bother and nothing further happens as it is unlikely it will ever get paid.

In the latter the bank acknowledges a good customer / active account and suggests you try again. In modern practice all banks represent it automatically for you and they will do this up to 3 times.

This system stems from the automation of a process that goes back to Dickensian times, hence why the industry is desperate to get rid of it.

In your case your bank returned the cheque RDPR, it was up to you to put a stop on the cheque. The Contractor will have the funds and the Bank will be able to prove it (with a load of hassle on your part).